“This might be an opportunity for consumers who have felt that Whole Foods is inaccessible,” said Lauren Beitelspacher, a marketing professor at Babson College in Massachusetts.Īmazon could also get a better picture of customers by marrying data from Amazon and Whole Foods’ loyalty programs. Whole Foods, often derided as “Whole Paycheck” for its high prices, could see its reputation change if Amazon, a master at undercutting its brick-and-mortar rivals, passes any savings from automation to customers. In an email to customers, the company said it planned to maintain the same standards under Amazon, including bans on artificial flavors and colors. Whole Foods will keep operating stores under its name. Gartner retail analyst Robert Hetu said Amazon could bring pieces of that to Whole Foods to further cut costs.īoth companies said there will be no layoffs, but they did not respond to other questions about Amazon’s plans for Whole Foods. Shoppers skip the checkout line, and their Amazon accounts get automatically charged.
The company also has been testing sensors at a convenience store in Seattle to track items as shoppers put them into baskets or return them to the shelf. “Dominant players like Walmart, Kroger, Costco and Target now have to look over their shoulders at the Amazon train coming down the tracks,” O’Shea said.Īmazon could try to cut operational costs at Whole Foods by using the same types of robots that already move inventory around at its e-commerce fulfillment centers. The Amazon-Whole Foods combination, expected to close by the end of the year, could put even more pressure on those chains and other big grocery sellers. Whole Foods itself had launched an offshoot chain named after its “365” private label brand in a nod to the popularity of no-frills chains. Groceries are already a fiercely competitive business, with low-cost rivals like Aldi putting pressure on traditional supermarket chains and another discounter, Lidl, opening its first U.S. Whole Foods has seen its sales slump and recently announced a board shake-up and cost-cutting plan amid pressure from activist investor Jana Partners. Just two years ago, Whole Foods CEO John Mackey told Bloomberg BusinessWeek that Amazon’s foray into grocery delivery would be “Amazon’s Waterloo.”īut it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978. Amazon already offers grocery-delivery services in five markets, but analysts say expansion is tough because its current distribution centers are set up for dry goods, not perishables.
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