We all are desperately lacking in time: jobs, school, family, friends and other commitments have us more time-strapped than ever, despite the many advances in technology that are supposed to make things easier for us. But I will honestly say that my Apple watch really hasn’t freed up much of my own time. This is why businesses offering same-day shipping, pre-packed food delivery, and digital wardrobe-consultative (e.g., Stich Fix) businesses are taking off. Yet, as social creatures, we also crave experiences, and most shoppers want good value from products and services for our hard-earned money.
Amazon once again shook up the retail world with its acquisition of Whole Foods Market. Many retail analysts and consultants are still pontificating on how this will morph grocery and e-commerce even more. In the early days, the digital giant boldly slashed prices on many Whole Foods items and wasn't shy about it. Smart move. Traditionally a high-end grocery store, Amazon is now positioning Whole Foods as a viable grocery option for many people who may previously not have been willing or able to shop there. The retailer has also provided an easy avenue for consumer trial: the inclusion of Amazon delivery and return capabilities within Whole Foods stores will motivate shoppers to visit, and the epicurean draw will entice a walk through the store. Shopping at Whole Foods is by design a very sensory experience – as it is at Wegmans and The Fresh Market. Other grocers have taken notice of this experiential draw with upgrades, store remodels, and introduction of in-store events such as wine-tastings, cooking classes, samplings, and more. This is the experience piece of the puzzle. The combination of convenience, experience, and now value with the lower pricing should bode well for Amazon.
Here in the greater Richmond, Virginia market, the grocery war is intense, to say the least. Last year, Wegmans opened two huge new stores. The grocer was highly anticipated by many people, and I am always amazed at how busy my local store is. I don’t venture to the one in the west end of town, but from what I understand, it’s equally busy, if not more so. While that end of town is also more densely populated, there are even more grocery options. In addition to Wegmans, shoppers can choose from Whole Foods, Trader Joe’s, Martins, Food Lion, Kroger, a popular local grocer named Tom Leonard’s, and a newly opened Publix (thanks to the recent Ahold-Delhaize merger). What makes a shopper choose between these many options? Convenience + value + experience.
Why would I drive all the way across town and wrestle traffic to buy something from Whole Foods for a higher price than a similar product I could buy from my local Kroger? Well, wait…now I can get my new Apple watch band tomorrow (delivered to the Amazon pickup location in Whole Foods), instead of waiting 2 days for it…plus pick up some gluten-free pasta, free-range chicken, and a good local craft beer for my husband at the same time. Amazon is betting on this very behavior.
Amazon is also gaining a wealth of knowledge and data about the grocery industry. This, coupled with the immense amount of consumer information the company has already accumulated through its digital channel can mean tremendous advancements in optimizing assortments, pricing, promotions, and more – for both Whole Foods and Amazon’s digital channel.
Of course, Walmart is answering Amazon’s recent move by teaming up with Google to offer voice-activated shopping for a vast number of items, with free delivery once a minimum purchase amount has been met. Is Walmart too late to the game? Probably not, since Walmart shoppers and those who shop at Whole Foods have very different demographics, and not just from a price-point perspective. In Walmart’s case, there has always been a definite focal point on value, and the retailer is obviously increasing focus on convenience, but it really doesn’t seem to worry about creating a unique or engaging shopping experience. Most Walmart shoppers have accepted this strategy, and simply view shopping as another chore – as opposed to an enjoyable event. Retailers like ALDI, LIDL, and Costco capitalize on the value element as well, but these grocers have also incorporated bits of experiential shopping elements, such as “ALDI Finds” treasure hunting and Costco’s irresistible sampling events.
Given the focus on value and convenience, I also wonder how the Walmart / Google Express partnership will handle these pieces of the puzzle with competitive and substitute products from other retailers like Target and Kohl's, since they will all be vying for the same pool of customers on the same shopping platform, all while trying to maintain margins and build customer loyalty. Perhaps Walmart is going to play the Miracle on 34th Street loyalty gamble and direct customers towards the best price or a better product, even if it means a potential lost sale. (Frankly, I don’t see that happening.) And what role does Google play in this type of scenario? All things being equal, if the product is delivered directly to a customer’s doorstep, will it really matter to the customer what merchant fulfilled it? Even if it means paying a shipping fee, this speaks to the convenience (or some may say laziness) factor. Or on the contrary, will highly value-conscious consumers become frustrated about seeing different pricing across retailers, yet not being able to take advantage of better pricing due to minimum order requirements? What then, happens to price matching?
I have said this before (as have many other retail experts), and I still firmly believe it: brick-and-mortar retail is not only still very much alive, but represents an amazing opportunity to create unique and memorable shopping experiences that digital alone will never be able to replicate. As we become increasingly dependent on our “screens,” we humans also desire interaction with other people. Technology and the online channels can certainly enhance these experiences – before, during, and after the shopping journey, but the physical act and experiential nature of shopping should remain a very strong driver for all retail strategies. Amazon is betting on this – thus the brave move into a (Whole Foods) new world.