• Contact & People
    • Media
  • Blog
  • Work with us
  • FAQs
  • Multicultural
  • Français
Menu
  • Contact & People
    • Media
  • Blog
  • Work with us
  • FAQs
  • Multicultural
  • Français

Whole Foods Becomes Part of Amazon: How Will This Impact the Industry?

Share on facebook
Share on twitter
Share on linkedin

As part of an ongoing effort to become a one-stop shop for just about everything, Amazon entered the world of grocery retail with the addition of Whole Foods to its portfolio. For Amazon, it was an atypical move into the domain of bricks-and-mortar retailing. What might this mean for the grocery business as a whole?

So great is the influence of Amazon, the mere filing of a trademark for prepared food kits immediately drove down the stock value of Blue Apron Holdings, the former darling of the meal-kit delivery business. It should not come as a surprise the purchase of Whole Foods caused a similar reaction with SuperValu, Sprouts, and Kroger (the 5th largest grocery chain in the world) shares dropping in value by as much as 14% after the announcement of the takeover.

The effects of the purchase, which went through at the end of August, were immediately obvious in the more than 450 Whole Foods stores. Prices on many grocery items were reduced, signs promoting sales and “new lower prices” sprouted everywhere, and stacks of Amazon Echo devices suddenly appeared in grocery aisles. It was a quantum shift in presentation for what had been a niche retailer where shoppers went in search of higher quality products, not lower check-out totals.

Going forward, the challenge for competitors will be to try and match Amazon in terms of integrating digital and physical retail strategies - a tall order considering the relative sluggishness of grocery retailers to evolve, compared to the relentless innovation that has driven Amazon from the beginning.

Early indicators are that U.S. consumers are reacting favourably to the changes at Whole Foods, with JPMorgan Chase reporting traffic at the retailer was higher during a four-day period in September 2017 than at any point in the past three years.

In Canada, Whole Foods has a small presence, with just 13 stores split between British Columbia and Ontario. Amazon, however, is within reach of every Canadian with an internet connection. In 2016, Amazon generated over $3.5-billion in e-commerce sales in Canada, according to BMO Nesbitt Burns. So, while an Amazon-owned bricks-and-mortar grocery chain in Canada may not heavily impact the landscape of traditional grocery buying, e-sales could pull organic food into the mainstream.

On the whole, organic food products carry a higher margin than their non-organic counterparts; the Amazon braintrust knew what it was doing when it chose this category as its point-of-entry into the market. To date, large grocery chains trying to go online in Canada have had limited success. Perhaps this reversed partnership - a small chain with an e-commerce juggernaut - combined with a more profitable product array will be the magic combination that convinces Canadians to buy organic en masse and puts online grocery shopping on the map.

You may also like

Dairy farmer and technician inspecting herd in a barn

#Buttergate in Review: The Fallout and How Effective Communication Could Have Mitigated It

We launched the Nourish Network, a partnership between Nourish Food Marketing, Ad Farm, and Kahntact,

Read More »

The Hard Truths of #Buttergate

For the past 14 months or so, Canadians have spent more “quality” time in their

Read More »
couple in masks grocery shopping

One Year of COVID: A Nourish Webinar in Association with Canadian Grocer

Please enjoy this pre-recorded video of Nourish President Jo-Ann McArthur’s informative and insightful webinar. What

Read More »

Need help? Email feedme@nourish.marketing

Toronto

201 Niagara Street
Toronto, ON
M5V 1C9
Canada

Montreal

4388 Rue Saint-Denis
bureau 200 #2206
Montreal, QC
H2J 2L1
Canada

Guelph

Unit 202
230 Hanlon Creek Blvd.
Guelph, ON
N1C 0A1
Canada

Linkedin
Instagram
Twitter

We are using cookies to give you the best experience on our website, to count visitors and to learn which of our pages are the most popular.

By continuing to use this website, you agree to this use.

Nourish Food Marketing
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.