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Amazon insider speculates on grocery strategy (AMZN)
BI Intelligence
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Amazon will pass Walmart as the top US grocer by 2030 following its $13.7 billion acquisition of Whole Foods, predicted Brittain Ladd, a former Amazon executive who worked on global expansion for AmazonFresh, the retail giant's online grocery arm, in an interview with GeekWire.
Amazon will benefit from new access to a wide array of in-store and grocery-specific shopping data. Ladd suggested that Amazon should spend the first year after the acquisition gathering insights on consumer preferences and grocery operations to formulate an overarching grocery strategy.
Amazon could introduce new tech for tracking items and foot traffic in Whole Foods stores to help gather that data. This could allow Amazon to produce targeted private-label items, maximize the appeal of its AmazonFresh grocery delivery service, and even design newstore formats that match different consumer needs.
Ladd offered several predictions on how Amazon will proceed with Whole Foods to take control of the grocery industry.
Amazon will use Whole Foods to build consumer trust in AmazonFresh. Ladd suggests that Amazon will seek to build a reputation of providing consistently fresh, high-quality produce at Whole Foods stores and, subsequently, through AmazonFresh. That's an important goal, because the primary obstacle for online grocery services is that consumers often prefer to examine the produce they buy for quality. If consumers trust that they're getting the same quality of produce through AmazonFresh as they do in Whole Foods stores, it would likely solve this issue.
Several different store formats will be introduced to maximize value. Ladd believes Amazon will introduce a variety of new store formats, including more of Whole Foods’ smaller 365 stores, as well as drive-thru pickup locations for AmazonFresh. Opening more 365 stores, which offer cheaper prices on Whole Foods brands, is integral to Amazon coming out on top in the ongoing grocery price war with Walmart, Lidl, and Aldi. Ladd also suggested that 365 stores could feature Amazon Go technology, which could drive down operational costs, potentially leading to further savings for consumers.
Whole Foods will eventually be rebranded to shift focus to Amazon. This would help tie Whole Foods stores into Amazon’s ever-growing e-commerce monolith that will include video streaming, apparel, classic online retail, and more. With all of these branches branded together, Amazon could become a one-stop-shop for consumers, potentially helping it become the first ever trillion-dollar company.
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