A Big Deal: Whole Foods Offers Discounts to Amazon Prime Members
- Keywords:
- grocery
- amazon
- whole foods
BMO Harris Bank N.A. Member FDIC
As an industry watcher, it’s sometimes a challenge to understand the impact of seemingly benign industry headlines. Case in point: Whole Foods recently announced that Amazon Prime members can now receive in-store discounts. Makes sense, given it’s been nearly a year since Amazon acquired Whole Foods.
After a recent breakfast meeting, I decided to walk through a nearby new Whole Foods in Milwaukee. Wow! Whole Foods embracing this synergy with Prime is a much bigger deal that I thought.
As you walk in the store, you’re greeted by a table where you can sign up for Amazon Prime:
Members get an extra 10 percent off on selected sale items, along with other so-called Prime Member Deals—that’s a big deal given Whole Foods’ nickname of Whole Paycheck.
Signs are everywhere—especially in “center store”—but shoppers will also find deals in the meat/seafood case as well.
The biggest impact for me was the optics of the blue signs everywhere I turned. That’s not the Whole Foods I remember. This could suggest some truth to recent articles on Whole Foods CEO John Mackey taking a back seat. Also, the signs are pale blue, not unlike Walmart’s. That’s likely not an accident.
What’s next?
This is the first time I’ve seen Whole Foods systematically compete on price. It will take several months to see if “going promotional” will increase sales.
What will follow? Industry watchers expect Whole Foods to continue to expand private label offerings to provide shoppers greater value while expanding its own margins. We also expect some of the technology offerings (for example, no checkout lanes) in Amazon’s soon-to-open Amazon Go stores in Chicago and San Francisco will find their way into Whole Foods.
Furthermore, new Whole Foods stores will be smaller and Amazon will probably take its time on opening new Whole Foods stores. I wouldn’t be surprised if Whole Foods starts opening Amazon “stores” inside Whole Foods—not unlike Kohl’s new strategy of placing Aldi locations adjacent to its stores. Amazon will continue to experiment with brick-and-mortar—just as they’ve done with its core online business. Remember when it just sold books?
What’s at risk? Whole Foods’ original target market was the “true believer” natural and organic consumer. Promotional signs, expanded private label and no checkout lanes work against that customer type. My guess is many of these consumers have already found independents that better meet their needs. Then again, something tells me that Amazon isn’t counting on true believers anyway.
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Mike Fordney
Managing Director, Food, Consumer and Retail Group
As an industry watcher, it’s sometimes a challenge to understand the impact of seemingly benign industry headlines. Case in point: Whole Foods recently announced that Amazon Prime members can now receive in-store discounts. Makes sense, given it’s been nearly a year since Amazon acquired Whole Foods.
After a recent breakfast meeting, I decided to walk through a nearby new Whole Foods in Milwaukee. Wow! Whole Foods embracing this synergy with Prime is a much bigger deal that I thought.
As you walk in the store, you’re greeted by a table where you can sign up for Amazon Prime:
Members get an extra 10 percent off on selected sale items, along with other so-called Prime Member Deals—that’s a big deal given Whole Foods’ nickname of Whole Paycheck.
Signs are everywhere—especially in “center store”—but shoppers will also find deals in the meat/seafood case as well.
The biggest impact for me was the optics of the blue signs everywhere I turned. That’s not the Whole Foods I remember. This could suggest some truth to recent articles on Whole Foods CEO John Mackey taking a back seat. Also, the signs are pale blue, not unlike Walmart’s. That’s likely not an accident.
What’s next?
This is the first time I’ve seen Whole Foods systematically compete on price. It will take several months to see if “going promotional” will increase sales.
What will follow? Industry watchers expect Whole Foods to continue to expand private label offerings to provide shoppers greater value while expanding its own margins. We also expect some of the technology offerings (for example, no checkout lanes) in Amazon’s soon-to-open Amazon Go stores in Chicago and San Francisco will find their way into Whole Foods.
Furthermore, new Whole Foods stores will be smaller and Amazon will probably take its time on opening new Whole Foods stores. I wouldn’t be surprised if Whole Foods starts opening Amazon “stores” inside Whole Foods—not unlike Kohl’s new strategy of placing Aldi locations adjacent to its stores. Amazon will continue to experiment with brick-and-mortar—just as they’ve done with its core online business. Remember when it just sold books?
What’s at risk? Whole Foods’ original target market was the “true believer” natural and organic consumer. Promotional signs, expanded private label and no checkout lanes work against that customer type. My guess is many of these consumers have already found independents that better meet their needs. Then again, something tells me that Amazon isn’t counting on true believers anyway.
This is part 1
of a
2-part series on
Amazon/Whole Foods
PART 2
Kohl’s and Aldi: A Solid Partnership That Will Likely Expand
Mike Fordney | March 22, 2018 Retail And Wholesale Distribution
During a March 1 earnings call, Kohl’s CEO Kevin Mansell briefly mentioned the company would provide space to discount grocer Aldi at five to 1…
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