Amazon’s announcement that it would acquire Whole Foods sent shockwaves throughout the retail industry — leaving competitors (and customers) wondering what this merger means for each company, and how it will impact grocery shopping as a whole. When you take two companies who have strong reputations for loyal customers and clear brand identities, you can’t help but wonder whether combining them will result in greatness or a giant mess.
Over the past couple of weeks, we’ve started to get a first-hand look at how this merger is playing out. The good news — the companies are clearly putting their customers at the forefront of their short-term strategy, with product price-cuts at Whole Foods (including affordable avocados) and new, Prime-driven loyalty programs. While these new features have eased customer worries about the immediate fate of their favorite grocery store, there are still a lot of question marks around what this merger will mean for the future of each brand.
As the Amazon and Whole Foods story moves on to new chapters, long-term success will truly depend on remaining customer-centric — ensuring business decisions and strategies down the line continuously point back to customer needs. This requires both companies to understand their customer bases, create synergy between both brands and think about the next phase of their partnership — e-grocery.
First things first: Get to know loyal shoppers — and where they intersect
As I mentioned, these two retailers embody brand loyalty — we all know someone who refuses to buy their produce anywhere but Whole Foods, and someone else who simply couldn’t survive without their Prime membership. The problem with this level of customer loyalty is that when something changes (like an acquisition), mass hysteria sets in.
Change is inevitable in today’s business landscape; but the brands can keep customers calm throughout the merger by ensuring customer experience (CX) remains at helm of their long-term strategy. To accomplish this, both retailers must look to their data to know who their key shopper segments are, how they interact with their brands and what keeps them coming back. This is something Amazon has perfected over the years, allowing the ecommerce giant to lead the digital CX realm with its goldmine of customer insights.
The next critical step will be interpreting these insights to understand where their shopper groups intersect. By pooling their data and identifying which loyal Amazon customers also shop at Whole Foods, the brands can start to understand what is important to this group. Extracting insights from these correlations will allow each retailer to make smarter decisions on what new features and offerings (in-store and online) will keep their shoppers happy and loyal.
Leverage insights to create synergy between the brands for a new-age shopping experience
From here, it will be important to begin creating synergy between these two distinct brands. Retailers are constantly looking to integrate the in-store and online shopping experiences. With this acquisition, the challenge — and massive opportunity — rests in Amazon’s ability to leverage the more “traditional” image of the Whole Foods brand and tie it with its own reputation for digital innovation to reshape how consumers shop. Specifically, the retailers can meld the benefits of the in-store experience (like ability to touch and feel the product before purchase, or chat with a knowledgeable associate) with the best digital qualities (such as product reviews, social proof and expanded product selection).
This acquisition will only be successful if the two brands can retain their loyal customers, while also attracting new customers to the physical storefront. Going forward, we can expect to see an expanded selection of products and services at Whole Foods stores that more closely dovetails with the uniquely tailored digital experience that Amazon is known for.
What’s next? How this merger will drive online grocery shopping
While this acquisition was certainly a launch pad for Amazon’s foray into the brick-and-mortar channel, it also creates a new opportunity for Whole Foods to put a bigger focus on digital. The fact is that ecommerce is becoming a significant part of how we shop — in fact, I would argue that it’s just “commerce” at this point.
With research showing about 36 percent of the U.S. population lives 10 miles away from the nearest grocery store, it only makes sense that more and more people look to digital channels for their grocery needs. This is where we can expect the next phase of the Amazon and Whole Foods story to go. Equipped with the deep customer insights each retailer has at their fingertips, e-grocery shopping is a substantial growth opportunity for both companies to create new channels for customers and, therefore, reach new shoppers.
As the Amazon and Whole Foods saga continues, there is no doubt that customers are in for some big changes from both brands. The one constant we can expect, however, is that shopper needs will spearhead their post-acquisition strategy — whether to optimize the in-store experience or get their e-grocery plan underway.