In business, nothing is easy. Acquisitions can be rather difficult – especially when a company is moving into a new industry or niche market. This is no different for Amazon, who recently purchased Whole Foods and plans on making the supermarket chain its best, if not biggest, decision yet.
With the new purchase, the online retail company is beginning to see a plethora of challenges set before it. It’s not another chain of stores, or even a large corporation. Either of those would make this situation too back and white. CEO Jeff Bezos is shooting to be the richest man in the world, and that doesn’t come without challenges. The obstacles for Amazon are much more complex. In fact, they are us.
The acquisition that’s shaking things up
When Whole Foods was acquired by the large e-commerce company, it definitely caused a stir for many people. The Austin-based grocery store chain was struggling a bit before Bezos and his crew came along, so the buy-out didn’t come as quite a surprise.
By purchasing the large grocery brand, Amazon is also able to introduce those unfamiliar with it in its own customer base to something they haven’t tried before. “Amazon will stay reverent of the DNA of Whole Foods, so the core doesn’t abandon it and begin to educate those that are likely to experience the brand (for the first time) about the wonderful elements that are priced in a delicious way,” said Eric Schiffer, CEO of Patriarch Group, a private equity group.
The challenge set before Amazon
There are many things the company is focused on changing within Whole Foods to make it more marketable (pardon the pun) to more groups of people. The current system worked for Whole Foods for quite some time, but people are growing uneasy in this economy when they are expected to buy an orange for $6 – I can peel it myself! These consumers spread all across the different shopper types.
The “I’m not spending that much on this” customer
Those of us who don’t make anywhere near the median salary in the United States have a very hard time keeping up when it comes to the average consumer lifestyle. We can’t always shop organic, or even purchase healthier foods because our bank account limits us. This sets a mentality that we will not spend more than we have to on something. In the case of Whole Foods and their large selection of more expensive goods, this is amplified.
Amazon has a great track record with this type of customer. On its website, the company offers more affordable alternatives to those of us who cannot, or refuse to, pay more than a certain amount of money on an item. By shifting this strategy over to Whole Foods, the company could see a spike in traffic from this group.
This is my favorite group because it’s my generation. We catch a lot of flack for not buying homes, not moving on to higher education, not staying within the family business, and many other things. We are also hard to please when it comes to shopping. We are the bargain generation.
The majority of us make an acceptable amount of money, but we choose to spend it going out and being social or on the latest technology rather than using our money to buy food to cook at home. This is a huge problem for grocery stores – an entire generation of people refuse to be loyal, customers. When you add higher prices to the mix, you can forget about us shopping there. Why do think companies like Franzia do so well? We’re not buying $50 bottles of wine. Instead, we’re getting our $10 box (which is five liters – a STEAL) and using the rest on going out.
If Amazon continues to implement new ways to shop, and bring down prices to a more acceptable level, we will be more likely to use these services and buy these products from Whole Foods. “This is the ultimate dream marrying those principles with technology, which runs through their veins,” Schiffer said of Millennials.
Many of Whole Foods’ customers use the chain as a specialty brand instead of their everyday stop for meals and other goods. This isn’t a huge niche, but it does affect the growth of the brand. A shift in marketing – which Amazon has proven many times it is exceptionally good at – could increase traffic from this group.
Lower price points, implanting technology on more levels, and better marketing strategies will all go a very long way for Amazon. I like to see this acquisition as less of a business deal, and hopefully more of a cultural shift in how we shop and how we sell.