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Amazon Whole Foods acquisition: The implications July 2017

Amazon Whole Foods acquisition: The implications July 2017

Amazon’s $13.7bn acquisition of Whole Foods has the potential to radically alter the evolution of grocery shopping.

A lot of focus has been on the stores and the idea of AmazonGo technology being installed in Whole Foods, widening the range of brands (which could kill its USP) – and of course using the stores as decentral hubs for online grocery deliveries.

This view forgets though that many Whole Foods stores could perhaps support a locker and click & collect style offering and with a stretch the current Instacart set up (to be replaced by Amazon’s PrimeNow) but never a complete AmazonFresh basket (including 3P products).  The logistics back end is of much more interest to AmazonFresh, as are the established relationships with suppliers to the grocer often going back decades.

But this acquisition is about much more…

Background on Whole Foods p3
Total US Organic sales and growth 2006 -15
Why Whole Foods is now struggling
Whole Foods: struggling against a multitude of new challengers
Whole Foods: interest in meal kits
Whole Foods: launching meal kits
Whole Foods: 365, responding to the challenge from Trader Joe’s, Sprouts et al
Whole Foods: 365 first store opened in Silver Lake, LA
Whole Foods: 365, partnering with on trend food service partners and Instacart
Whole Foods: 365 Portland partnering with local foodservice heroes
The Amazon acquisition
Benefits: WHF stores and infrastructure making AMZN a national player overnight, introduction of AMZN products in store
Access to an established food supply chain and supplier relationships, but many small scale and regional
Expanding Amazon’s grocery logistics footprint, back end of interest to AmazonFresh – to a degree
Whole Food stores as hub for Amazon Fresh? Probably not, perhaps opportunity for PrimeNow
The problem with an Instacart style offering from Amazon, smart warehouses versus dumb store and in store picking
Introducing technology innovations into Whole Foods back end and front end, AmazonGo, Alexa, Prime for Whole Foods
How could Amazon lower Whole Foods prices? Via a new spin off and hybrid between both models
Conclusion: this is more about revitalising Whole Foods than anything else

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