Amazon Acquires Whole Foods…. Now What?

Amazon announced that it is acquiring Whole Foods. The impact of this purchase is far reaching for retailers, grocers and brands. As marketers, we need to understand what this shift means to the retail landscape and to shopper expectations. Given this news, TPN’s Digital Commerce team has developed thoughts on what happens now and what to do.

WHAT TO EXPECT

Amazon is going to get smart on grocery.
Whole Foods gives Amazon the ability to leverage its knowledge within the grocery channel and a better understanding of how to source local and organic foods.

Amazon will integrate its features at Whole Foods.
Expect Whole Foods to integrate the ability to make transactions through a Prime account similar to the Amazon Go grocery model – making for faster, more seamless experiences.

AmazonFresh will grow.
Whole Foods locations will enable AmazonFresh to take food delivery to the next level, with faster, fresher deliveries taking place in a truly on-demand model.

Prices at Whole Foods will drop.
Many expect this merger will make Whole Foods more affordable. That said, it’s fair to expect prices at grocery stores to drop altogether.

HOW TO PREPARE

Get to Know Amazon.
If food brands haven’t already, it’s crucially important to build relationships with Amazon, get familiar with their ecosystem, and start understanding its numerous paths to purchase.

Get to Know the Amazon shopper.
As stated in TPN’s Shopping in the Flow report from 2016, the retail purchase funnel is gone, and the buy is happening outside of physical stores through mobile devices and other in-home technology like Amazon Alexa. Brands must move to where these purchase take place… before it’s too late.

Don’t wait. It’s happening.
Amazon isn’t waiting for anyone in its efforts to extend its reach across the retail landscape. Getting familiar with the retailer today can only fuel a brand’s success for inevitable retail changes in the future.

SO WHAT’S NEXT?

More change is coming. While Amazon will continue to grow and extend its giant reach across the retail landscape, expect other heavy hitters – like Walmart, Target, and Kroger – to step up to the plate, find ways to evolve, and introduce their own retail innovations.

These are exciting times, and it’s just the beginning. While much of what this merger means is still very much unknown, one thing is certain: More change is coming.

At TPN, we’re ready for it.

Author: Rami Odeh | Digital Commerce Director | rami_odeh@tpnretail.com

Valentine’s Day Gets a Facelift

Millennials, described as “confident, connected and open to change” by PewResearch, are living up to their characteristics according to TPN’s Seasonal Pulse New Year 2014 study.

Among all generations, millennials are the most likely group to “change it up” this Valentine’s Day. Thirty percent of millennials are planning to celebrate the romantic holiday differently than last year (see graph below), providing a huge opportunity for marketers to influence their plans – especially if millennials are trying to impress a new special someone.

Further, 21 percent of millennials plan to stay home and cook a special meal this Valentine’s Day. As notorious foodies who are always online, millennials will be hunting down new meal inspirations across social media and the web. Grocery retailers and online brands should be targeting this generation as they plan for their night in.

While 29 percent of millennials do plan on going out for a meal, those staying in, including myself, won’t have to make a last-minute reservation or spend an arm and a leg on food. Maybe it’s me, but I think millennials may be on to something.

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Source: TPN Seasonal Pulse, New Year 2014

For more information regarding TPN and our Seasonal Pulse findings, please visit www.tpnretail.com.

From the Westside: Fresh & Easy Exits US Market

It comes as no surprise to many retail watchers that British parent company Tesco announced this morning that it will attempt to sell all 200 Fresh & Easy stores, located in California, Arizona and Nevada. Incredibly, the chain did not make any money during its 5-year duration in the US.

It’s an unfortunate situation for the small-format, innovative stores that launched in 2007 with high hopes for bringing fresh food to “food deserts,” or areas that were underserved by supermarket and grocery store chains. Initial plans were to launch 1,000 stores in California & other western states before expanding east. Those plans were scaled down due to the economic climate as well as lack of performance & profit.

Why did Fresh & Easy fail? Theories abound. Primarily, the US grocery market is competitive, with well-established banners under Kroger, Safeway, and SuperValu brands.There’s also increased competition from high-end/specialty/independent grocery chains like Whole Foods and Trader Joe’s, as well as the rise of mass-market retailers with grocery components, notably Walmart and Target.

Fresh & Easy also pursued a self-service check-out model that was not popular with consumers who are used to cashiers, especially for high-volume, check-out intensive purchases. The chain also did not offer vouchers or coupons, which US grocery shoppers are accustomed to. In fact, many grocery chains highlight their coupon program as the primary draw for shoppers, even offering shopping incentives such as double coupons. Fresh & Easy also made a push to sell ready-made meals which were not necessarily compatible with local shoppers and their habits, mainly because shoppers in the west tend to grocery shop once a week and look for a wide range of products rather than shopping more frequently, where they’d be more inclined to shop for a grab-and-go/ready-made product.

Finally, Fresh & Easy launched with a high percentage of private label brands and a reduced SKU assortment in the center of the store. Many consumers were unable to find the brands they were used to purchasing, leading to frustration and an additional shopping trip. Many shoppers willing to give the new concept a try visited once and never returned.

Ultimately, the store failed to find it’s niche in the competitive US grocery landscape and solve a real need for consumers. It tried to introduce a new way of shopping that wasn’t compatible with US shopper needs, desires or patterns.

Retail analyst Neil Saunders of Conlumino in London said “Retail history will likely record Tesco’s American foray as something of an unfortunate misadventure.”