business news in context, analysis with attitude

Terrific piece in the Wall Street Journal about how Amazon increasingly is making its presence felt in Whole Foods stores. Excerpts:

• “Sky-blue signs advertising discounts for Prime members greet shoppers in some Whole Foods parking lots. Inside the stores, blue placards spotlight lower prices for Prime members on organic nectarines and sausage.”

• “More stores have Amazon pickup lockers, pop-up stores, price-reduction tags, Prime membership promos and even delivery stations out front. Online delivery is moving to new markets.”

• “At some locations, Echo speakers, Fire tablets and Fire TVs are for sale alongside Amazon lockers where customers can pick up their e-commerce orders.”

• “Customers browsing Amazon’s website now are likely to see Whole Foods beans, baking soda and other store-brand goods displayed prominently. Amazon also appears to be giving a boost to Whole Foods’s “365 Everyday Value” products. The chain’s private-label sales have grown as a percentage of store purchases since the deal, according to advertising firm inMarket.”

While Amazon’s efforts are driving down some prices at Whole Foods, the story notes that “Whole Foods’s new delivery service has led some customers to gripe. Some parking spots now are reserved for delivery drivers, and store sections have been converted to busy order-assembly areas. Some store entryways and service counters now are crowded with workers picking up orders, customers said.”
KC's View:
The story makes the point that Whole Foods sales are up, though “sales per customer are down by an average of 1%.” That may not necessarily be a bad thing - it could mean that people are going more often and making more frequent, if smaller, transactions.

But here’s a passage from the story that makes the case most persuasively:

“41% of shoppers still don’t know Amazon owns Whole Foods, according to a recent national survey of 2,034 consumers by Field Agent, a data firm. Of the 436 Whole Foods shoppers surveyed, 45% thought Amazon had made the chain better. More than 80% of Prime members who shop at Whole Foods said they intend to shop there more often, the survey found.”

It won’t be for everyone, and it won’t work all the time. But this is a synergy that competitive retailers are going to have to figure out ways to battle.