How to win the grocery war one customer at a time

When companies do big acquisitions, it is often the customer who is the last to be considered. The digisphere is buzzing with commentary on the Amazon purchase of Whole Foods and what this means for retail once the eponymous pureplay got seriously into bricks and mortar. And it can’t be much fun to be any large US grocer watching your share price plummet on Amazon’s news.

However, this latest mega deal is hardly a done deal from the customer’s point of view. There are three main points to consider:

#1 How can Amazon serve customers instore?

One, Amazon may win all the major US customer service awards, but it never actually touches the customer, while every day in over 400 stores, Whole Foods customers meet the people behind the brand. This is a very different dynamic for Amazon and it will no doubt sensibly leave Whole Foods to continue to do what it does best, serve satisfied customers in store.

#2 Can Amazon be beaten on price? 

Two, the media talks about Amazon’s ruthless focus on beating all competitors on cost and that fact that it now brings real pressure to bear on Whole Foods’ suppliers, but the Whole Foods business is built on quality, ethical sourcing, fair play and trust, not on price. Whole Foods’ customers pay a premium because of what these qualities represent to them.

#3 Does the average Whole Foods customer agree with Amazon's approach?

Three, an Amazon customer is not the same as a Whole Foods customer; they may often be the same person, but they think and act completely differently inside each business, and are unlikely to have their mindset changed just because the two businesses are now one. In fact, we can expect to see some pushback from some Whole Foods customers who may feel that Amazon’s pile it high sell it cheap mantra is not for them.

In the battle for the grocery customer, Amazon will now face the same challenges as any store-based grocer and these grocers now have the chance to fight Amazon on their own turf. The opportunity lies in serving the customer better by understanding demand and that depends on optimising all the core retail processes of pricing, replenishment and promotions.

The data generated by these processes has reached a level of complexity that can no longer be managed by humans alone, and certainly not by humans operating within silos, a particular weakness in retail. Automation at the cutting edge, Artificial Intelligence (AI) is now making the best decisions daily on pricing and replenishment with published results that deliver value straight to the balance sheet.

This is technology, backed by advanced data science, that is available to all and gives any retailer worried about the continued ascent of Amazon and its Whole Foods acquisition the chance to level the playing field.

Matt Hopkins Matt Hopkins

is a Retail Industry Principal at Blue Yonder. Matt has spent over 20 years in the Retail Industry, working in Supply Chain & Merchandising roles before joining JDA, Oracle Retail, Salesforce and SAP in senior leadership roles.