Business Insider reports that "across the US, an unlikely store has been popping up down the street from Amazon-owned Whole Foods supermarkets: Amazon Fresh stores.
"It's Amazon's bet to expand its grocery business beyond affluent Whole Foods shoppers, analysts said.
"Amazon has opened 30 Fresh stores since mid-2020, the company's website said. Several of those openings have put Fresh locations close to existing Whole Foods stores."
The story suggests that the strategy is built on the notion that the two stores offer very different experiences - Amazon Fresh is seen as being more tech-oriented and offering better value; Whole Foods is perceived as having a stronger specialty and healthy food orientation. The feeling seems to be that rather than cannibalizing the consumer base, this combination actually offers retailers the ability to expand the base.
- KC's View:
There is one particularly interesting passage in the Business Insider piece, noting that "management at Whole Foods has also pushed back against some of Amazon's proposed changes, such as selling ads on the grocer's mobile app, which has led to a tense relationship between Whole Foods and Amazon."
Seems like a pretty good bet that some of these tensions may be addressed forcefully by Amazon's leadership when Whole Foods founder John Mackey steps down later this year.
I actually think that in theory, the combo strategy makes sense. My one caveat is that the more I visit Amazon Fresh stores, the less I am impressed by the marketing and merchandising efforts being used; I love the technology, but the stores seem almost haphazardly put together from a consumer perspective. And, there are a lot of people who feel that Whole Foods has lost a step or two since being acquired by Amazon.
So while a combo strategy may make sense, the question is whether both pieces of the combo are taking a lower-common-denominator approach that could undercut their brand equity.