Amazon Buys Whole Foods To Expand Its Digital Prowess In Retail

Brendan Miller

Written by Principal Analyst Brendan Miller and Principal Analyst Brendan Witcher.

Whole Foods’ brick-and-mortar expertise combined with Amazon’s digital prowess is a one-two punch that will give retail executives more sleepless nights. Our initial take on what Amazon’s $13.7 billion acquisition of Whole Foods means for the broader retail market:

  • To thrive in grocery, Amazon needs a keystone: the local store. Grocery is a high-frequency shopping experience. Whole Foods’ stores give Amazon a new store platform for deeper engagement across all its selling categories. Amazon can lock in its national distribution and logistics mastery with a local “place” in a way that other retailers will struggle to replicate. Now Amazon can tie into those weekly (or multi-weekly) grocery runs with add-on products and services further deepening their reach into customers’ wallets.
  • Amazon knows that to win at brick and mortar, retail theater is paramount. Whole Foods locations are destinations where the idea of “Retail Theater” still thrives. Consumers go to Whole Foods to shop but also to discover new foods, attend wine tastings, pick up prepared foods, and enjoy a cup of organic coffee. Whole Foods can be credited with turning Americans on to arugula, almond milk, and probiotics. The idea of retail theater and discovery is badly missing in most brick-and-mortar retail shopping experiences. Amazon is now getting private lessons from the master.
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Amazon Go Ushers In A New Era In Retail Technology

Nigel Fenwick

Amazon's new Amazon Go store ushers in a new era in brick and mortar grocery and convenience shopping. In the early 80's, electronic point of sale (POS) dramatically changed the checkout experience in grocery stores, speeding up checkout lines. Today, a checkout without POS is unthinkable unless it's a farm stand on the side of the road … and even here we're likely to see Square hooked up to a smartphone. But even with POS, the checkout has always been the big time waster in any grocery shopping experience. Until this week.

Six years ago, "The Ultimate Grocery Shopping App" described a future in which the grocery shopping experience was radically different from what existed in 2010. This week, Amazon has brought part of that vision to life by opening its first Amazon Go brick and mortar convenience store for Amazon employees in Seattle. A convenience store with no checkout lines … with no checkout.

Gone are the POS systems. Welcome to the era of automatic checkout. Amazon has used new technologies like image recognition and machine learning to go beyond at least some of the experience predicted back in 2010. Instead of shoppers having to scan items into their shopping cart, Amazon uses this advanced technology to track what shoppers pick up and add to their cart and what they put back on the shelf. No scanning, no checkout … just walk out and pay.

Why will this take off? Becuase it gives shoppers back significant time savings and it gives retailers potentially enormous costs savings.

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The Data Digest: A New Retail Reality, Boxed Up

Anjali Lai

They say that good things come in small packages – and it seems that those consumers who have signed up with the burgeoning wave of subscription services know this to be true. Today, whether you’re looking for fine wine or baby food, artistic inspiration or masculine essentials, you don’t have to leave your home to get – or even search for – the items yourself; the box delivered to your door may have just what you’re hoping for.

Subscription services are relatively new, but consumer awareness of and interest in the concept are growing. I recently became a customer of Stitchfix – and while I might be among just a handful of consumers who’ve actually signed up, nearly one-fifth of US online adults are interested in similar services. Forrester’s Consumer Technographics® data shows that interest is particularly high among young shoppers: 

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