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Amazon’s Whole Foods Just Made a Massive Strategic Decision. No One Saw It Coming
This is a radical change of direction. How will customers see it?
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
Have you been to Whole Foods lately?
Have you noticed much of a change, save for the marketing of certain Amazon products, that is?
Perhaps you’ll have felt that the employees seem a little more nervous.
I confess that, during a recent visit to a California Whole Foods, the cashier – a Whole Foods veteran of some years – offered a less than gushing description of life under the new Amazon regime.
Things are definitely changing.
Which is why I’d like to take you back to last month when Whole Foods launched two new stores in Atlanta.
These were Whole Foods 365 Stores, smaller than the parent’s stores and offering allegedly cheaper prices.
At the time, there was much fanfare.
Whole Foods claimed to be “excited.”
It said these two new stores were “two of our most exciting stores.”
That excitement appears to no longer be in its prime. Yes, after just a few weeks.
On Friday, Whole Foods decided it wouldn’t open any more of these 365 Stores. Ever.
Yahoo Finance says it’s seen a memo from Whole Foods CEO John Mackey, in which he made the sudden announcement.
What could have caused this vast about-face?
It seems that Mackey — and, presumably, his bosses at Amazon — believes Whole Foods doesn’t need these cheaper stores anymore.
Yahoo quotes these words from his memo:
As we have been consistently lowering prices in our core Whole Foods Market stores over the past year, the price distinction between the two brands has become less relevant.
I can just see the new slogan now:
Whole Foods. Don’t worry, we’re just as cheap as Kroger! Or Safeway!
Some might have imagined this decision could have been made earlier.
After all, Amazon enjoys projecting value — whether it’s real or not.
It has little experience in marketing a premium product and Whole Foods’ perception of Whole Paycheck wasn’t exactly helping business anyway.
Moreover, many of Whole Foods’ more traditional rivals have caught on to Whole Foods’ organic shtick, leaving the brand a little less distinct.
Then there’s the insertion of Amazon Go. These inhuman — I’m sorry, I meant human cashier-free — stores are designed for the quick purchases customers often need.
Some might say the fact that Amazon Go and a 365 Store sell a similar number of items would create confusion.
Surely, though, there’s no suggestion that Amazon Go is necessarily cheap.
Ultimately, then, with this cheapening of the Whole Foods offering, the brand may begin to lose the perception that it’s somehow special and be forced to compete even more directly with many other supermarket brands.
Mackey, though, insisted in his email that halting the 365 concept does not mean the end of creative thinking:
We will continue to innovate and experiment with new store concepts and designs that will allow us to offer customers unique and differentiated experiences that play to the strengths of the company.
Whole Foods’ advantage, of course, is Amazon’s money and the joys of its parent generating significant revenue from its Prime product, which can be used to influence shopper choice.
I asked Amazon for the corporate rationale behind Whole Foods’ sudden strategic shift. I’ll update, should I hear.
You see, I was moved by a statement offered by Whole Foods itself:
Whole Foods Market’s leadership independently made this decision and it is unrelated to Amazon Go.
But is it unrelated to Amazon Says Go Do This Now, Whole Foods?
Source: “Amazon Products” – Google News