Amazon Gobbles Up Whole Foods?
- June 20, 2017
Everyone is going bananas over Amazon’s acquisition of Whole Foods. Mergers often get some immediate buzz, but this particular merger has prognosticators reporting that groceries will never be the same, some jesting that soon enough Alexa would take our orders for Unity Vibration Kombucha and drones would deliver Luna & Larry’s Coconut Bliss vegan ice cream. A colleague hoped there would be a Dash button for organic goji berries.
Whole Foods Chief Executive John Mackey suggested that Amazon would not be “stupid enough” to change the natural grocer’s high standards, but I wonder if Whole Foods will actually be swallowed whole. The cultures and brand values of these two companies could not be more different.
As a purveyor of premium and specialty foods, Whole Foods built its brand and competitive advantage on purpose, enlightened values and a unique in-store experience delivered by passionate, engaging employees. Whole Foods became an upmarket darling of millennials and others willing to pay more for natural and organic food.
In contrast, Amazon built its brand on technology and efficiency, with its competitive advantage coming from the ability to get a vast selection of goods at very low costs. Amazon wins customers with the get of everything being cheaper and more convenient. Many see Amazon and its algorithms as the prime driver in retail’s decline. The Washington Post, owned by Amazon’s CEO Jeff Bezos, reported: “People are worried Amazon will replace Whole Foods workers with robots.”
LRW recently acquired 3 companies and continues to seek out others to help us deliver value for our clients. Knowing that the success of our business depends on our people, their shared values, and the culture in which we all work day to day, purpose, values and brand promise are key criteria used in evaluating future partners. All this has me wondering if the Amazon and Whole Foods merger will be like Reese’s Peanut Butter Cups, the union of two great things that taste great together, or will it be more like that palate-zapping experience of mixing orange juice and toothpaste. Bezos is a man with a vision and for the most part, he has made strong investments. Prior acquisitions for Amazon have largely been tech companies and other online retailers, likely with more aligned brand values than Amazon and Whole Foods seem to have.
We will all be watching to see how it plays out for the grocery industry, employees and customers of both brands. The merger may help Whole Foods shed some of its negative brand associations because of new capabilities, but it will be interesting to see if Amazon will be able to keep the Whole Foods brand intact and live up to the Whole Foods mission and purpose statement.