Amazon: "setting benchmark in retail" with Whole Foods purchase

Amazon’s acquisition of Whole Foods is “setting the benchmark in retail” and its competitors need to up their game, according to an expert in ecommerce.

Amazon announced at the end of last week that it was buying Whole Foods for £10.7bn, making it clear that it is serious in its commitment to online food retailing.

Hugh Fletcher, global head of consultancy and innovation at ecommerce consultancy Salmon, said: “This deal is a clear signal of intent from Amazon to dive deeper into the grocery sector. Amazon Fresh and Amazon Go were the first steps, but this shows the ecommerce player is no longer treating grocery as just another branch in its huge eco-system. While the supply-chain logistics and overall operations will be complicated, there is no hiding the fact that Amazon is striving to own the entire retail sector.

“It’s evident that there is also a growing importance on a robust omni-channel strategy, for both pure play and traditional retailers, and the deal underlines Amazon’s approach to grow its business across online and offline channels. Amazon’s newest move positions it to thrive and is designed to successfully beat competitors to the punch in grocery. The partnership also presents an opportunity to maximise Whole Food’s vast market share in the US and will no doubt enable it to digitally transform into the future.

The move marks Amazon’s biggest push to date into traditional retailing and it adds weight to its grocery arm, which it moved into in 2007 with the launch of its food delivery service, Amazon Fresh.

Fletcher added: “Amazon is now very loudly expanding its offering beyond retail to own every single instance of the customer experience – this feeds into Interface Imperialism where brands diversify and expand their offering into entirely new services. Digital assistants and voice interfaces may well be the future of shopping – the rise of Amazon Echo, Google Home and Apple HomePod certainly suggests so – and Amazon will look to link their new grocery function up with Alexa. As it shows no signs of slowing, and as we shift into a screen less society, retailers will have to transform their offering to meet shoppers’ evolving traits. It remains to be seen whether Amazon Echo is just another fad, but what is clear is that, one way or another, Amazon is currently setting the benchmark in retail and competitors better watch out.”

Whole Foods, which was founded in 1978 and is a pioneer of the move towards natural and organic foods, has more than 460 stores in the US, Canada and the UK. It employs around 97,000 people.

The takeover deal is expected to be completed in the second half of the year. 

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