Tuesday, March 12, 2024

Amazon’s Missteps with Whole Foods Market Again?


While the acquisition of Whole Foods by Amazon in 2017 brought potential benefits, there have also been criticisms of Amazon's approach, including our own Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions. Here are 8 points often mentioned:

1.       Branding: Buying Whole Food aka ‘Whole Paycheck’ Amazon missed an opportunity to reposition Whole Foods too Amazon’s core strength competitive pricing. Initial attempts to lower prices across the board reportedly alienated Whole Foods' core customer base, accustomed to higher-priced, specialty items. Come on that was a sign that legacy employees were not buying to Amazon’s way.  Why? Messaging.

2.       Data Over-Load: They had so much data that was counter to consumer driven food path to purchase they then opened Amazon Go, Amazon Fresh, now Whole Foods Express. Amazon does not have a balance of ‘Intellectual Quotient vs Emotional Quotient’.  The fact is consumers eat with their eyes.   

3.       Loss of "Whole Foods Experience": Critics argue that Amazon's focus on efficiency and cost-cutting impacted the in-store experience. Some claim the unique atmosphere and customer service aspects that differentiated Whole Foods were diluted.

4.       Employee Morale: Integrating Whole Foods' company culture with Amazon's, known for its demanding work environment, reportedly led to employee dissatisfaction and high turnover at Whole Foods.

5.       Missed Opportunities in Online Grocery: While Amazon is a leader in online retail, some argue they haven't fully capitalized on integrating Whole Foods into their online grocery platform.

6.       Amazon-centric Branding: Replacing Whole Foods signage with prominent Amazon branding in some stores is said to have alienated customers who felt the unique identity of Whole Foods was being lost. Think about it. Does Amazon want to get stuck in the middle like Kroger and have 19 plus banners selling food. It’s nonsense.

7.       Private Label Pushback: Amazon's introduction of their private label products in Whole Foods faced resistance from some customers who felt it clashed with the store's focus on established, often local, brands.  Simple messaging problem. Why?

8.       Cannibalization of Whole Foods Market Share: Concerns exist that by offering Whole Foods products through Amazon Prime, they might be taking away sales from physical Whole Foods stores, impacting their long-term viability.  It’s a branding, pricing, issue, positioning issue and yes, another misstep.

It's important to note that these are just some of the criticisms leveled against Amazon's approach to Whole Foods by Johnson, and the situation is complex with various perspectives. It’s time to stop arguing that Amazon is still integrating the companies and that long-term success is possible.

So, this new Whole Foods Market that they have introduced, “quick-shop” small-format store designed to provide customers in urban neighborhoods a fast, convenient shopping experience. Ranging between 7,000 and 14,000 square feet, the size of many traditional convenience stores, the locations are about a quarter to half the footprint of an average 40,000-square-foot Whole Foods grocery store, paving the way for expansion in dense, metropolitan areas.

Another new formant is not the answer for Amazon’s Whole Foods.  Success does leave clues, it’s time Amazon stop the missteps allow Whole Foods, Amazon Go, Amazon Fresh to focus on the consumer drive for fresh food fast with grocerant niche meals and meal components playing a larger role not smaller.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information. 

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