[vc_row][vc_column][vc_column_text]*This blog post was co-authored by Wendy Wallner and Stephanie Scalice
Just last month, Amazon announced its acquisition of Whole Foods Market for a whopping $13.4 billion. As the various hot takes rolled in, we looked to US consumers for their reactions, conducting a survey of 1,000 US adults a week after the announcement. We learned how many people currently shop with both retailers, what kinds of changes they expect from each company, and what they would and wouldn’t like to see in the future as shoppers. Here are five key takeaways from the study.
Consumer reaction was mostly positive
While shoppers are still not certain what the Amazon/Whole Foods merger means for them, the reaction among consumers ranged mostly from positive to neutral. Of the thousand people surveyed, 23% had a positive reaction, while 38% of Whole Foods shoppers found the news to be positive, followed by 31% of Amazon shoppers (and 43% of both Whole Foods and Amazon shoppers). Only 10% of consumers found the news to be negative.
Optimistic shoppers hope that grocery prices will drop and that delivery fees will be waived for Amazon Prime members. They would also like to see Amazon start to carry Whole Foods products online — and on the flip-side, see Whole Foods stores use new technology that will make in-store shopping more efficient.
One of the bigger barriers to online grocery shopping is the fear that the quality and freshness of products are not as good as what is purchased in a physical store. As a result, consumers are hesitant to trust the quality when someone else is selecting items for them. This study shows the Whole Foods connection would give shoppers more confidence in ordering fresh products online.
Whole Foods shoppers express fear about changes
Whole Foods shoppers, who typically care more than the average consumer about their communities and causes that align with their own, expressed some concerns over the Amazon acquisition. Specifically, they hope that their local Whole Foods store will remain open, and that employees will not be laid off or their morale affected. They do not want their shopping experience to change nor do they want the look and feel of Whole Foods outlets to change.
There is an existing relationship between Amazon and Whole Foods shoppers
The study confirms that Amazon and Whole Foods are a good fit. According to the study, three out of four Whole Foods shoppers have made at least one purchase through Amazon in the past month; and there is also a higher percentage of Amazon Prime memberships among Whole Foods customers (50%) than total US consumers (37%). Additionally, Whole Foods shoppers are more likely to buy groceries online (26% of all online grocery shoppers also shop at Whole Foods) than the average consumer [22% of US consumers shopped WFM in the past month) .
Interest in omni-channel grocery shopping
Although grocery eCommerce is currently a small market, the Amazon/Whole Foods alliance allows consumers to anticipate a future of omni-channel grocery shopping. While consumers aren’t yet willing to fully commit to purchasing Whole Foods products online (only 9% of US shoppers indicated they would be “extremely/very likely” to sign up for an online grocery and/or meal delivery service through Amazon and Whole Foods), there is some latent interest (22% of all consumers were “somewhat likely”).
Another potential benefit to Amazon is Whole Foods’ strong equity in prepared foods. Not only will they be able to deliver groceries, they’ll be able to deliver meals too, as well as offering omni-channel services like click-and-collect, covering all aspects of food eCommerce.
Increased customer loyalty?
An Amazon/Whole Foods deal makes sense and points to some incremental growth for each brand, with a portion of current shoppers indicating that they expect to shop more at both retailers. But it’s more likely that most will wait and see. In fact, the study shows that Amazon Prime members, whose shopping habits demonstrate that they aren’t as loyal as one would think, have surprisingly low interest in the merger and its possible outcomes for themThe reason? They are heavy shoppers of all channels and want to keep options open. Their biggest concerns surround their hope that Whole Foods stores remain open and the local business are not impacted by the merger.
The main goal for any grocery retailer right now should be stronger loyalty from customers; many shoppers forego the convenience of buying all their groceries in one place to instead pick and choose where they shop depending on what each retailer is good at. They have different lists for different stores, buying groceries at five different retailers each month (on average). Will the convenience that Amazon and Whole Foods are able to offer bring back one-stop shopping and increase customer loyalty? It depends on who you ask, but ultimately it will depend on what kind of offerings and benefits are clearly established to consumers beyond pure convenience.