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Amazon announced this morning that it will expand its Prime savings program to Whole Foods stores in 10 new states - Arizona, Alabama, Georgia, Hawaii, Oregon, North Carolina, South Carolina, Washington, Louisiana and Mississippi.

The move brings to 23 the number of states where Amazon is offering 10 percent savings on selected items at Whole Foods stores to members of its Prime program; the discounts also are available at every 365 by Whole Foods store nationwide.

A.C. Gallo, president/COO of Whole Foods Market, says that the company is “accelerating our timeline to expand these savings to all of our U.S. stores” based on positive response to the initial rollout.

Prime members can access the savings by downloading the Whole Foods app to their smartphones and then accessing their Amazon accounts and then scanning the code at checkout, or by providing their smartphone numbers when checking out.

At the same time, the Wall Street Journal has a story about how Amazon’s “year-old acquisition of Whole Foods is prompting the food industry to retool how it sells fresh food to consumers.”

Among the shifts cited in the story:

• “Grocery chains have invested in online delivery and pickup services, in some cases bumping plans ahead to two- to three-year timelines instead of five to seven years, according to Steve Caine, a Bain & Co. partner who consults with grocers on their online strategies.”

• “Food retailers, manufacturers and other suppliers have begun to make fundamental changes to their selling strategies, driven partly by stronger sales and delivery from Whole Foods stores since the acquisition.”

• “Of 11 supermarkets analyzed … Trader Joe’s and Sprouts customers were most eager to try out Whole Foods after the acquisition to check out subsequent price cuts, with 8% of their regular shoppers visiting the rival chain.”

• “Many food makers are redesigning their packaging and formulas to better sell through Amazon and Whole Foods, placing an emphasis on online repeat purchases instead of impulse buys.”

Retailers, the story says, “haven’t been surprised by Amazon’s moves.” But in the words of Bain’s SteveCaine, “It’s this anticipation of what may come next that has turned up the heat on everyone.”
KC's View:
First of all, regarding the Journal story … my main reaction was to the line about how some grocery chains have been “bumping plans ahead to two- to three-year timelines instead of five to seven years” for embracing online, delivery and pickup.

I think it is important to have long term strategic goals and a vision for the future … but five to seven years is an eternity, especially when it comes to doing delivery and pickup. Some things take more time than others, but dithering is not an alternative.

As for the Whole Foods Prime announcement…

No surprise here. Pretty much from the moment Amazon bought Whole Foods, it seemed both self-evident and inevitable that some sort of Whole Foods Prime program would be rolled out. I’d also argue that what Amazon is doing now is just the beginning, not the end game.

The question is, how to compete with it.

Interestingly, Business Insider has a story about how Amazon has “quietly updated the logos for all of its Prime services earlier this year, dropping the word Amazon … The move signifies what Amazon has likely long considered: Prime is a brand in its own right, and it's time for it to stand on its own two-day shipping feet.”

One has to think about all the permutations this could take. For example, what if Amazon decided to start opening Amazon Go convenience stores inside Whole Foods stores, with separate entrances and checkouts, and then made them only accessible to Prime members? Y’think that could continue to drive Prime membership numbers, enveloping even more people inside the Amazon ecosystem?

(For more on this, see our story below, Poll: Winning The Domination Game.)