August 28, 2017
So today it begins. Today is Amazon’s first day as a grocery store. The first salvo: Dropping prices at the notoriously overpriced Whole Foods. Famously nicknamed “Whole Paycheck”, numerous blog posts, news stories and parodies have been written chronicling the mystery of walking in to Whole Foods for 1 item and walking out $200 poorer with only 5 items in hand.
In an effort to take on the big chain competitors, from retail powerhouse Kroger, which owns Dillons, Fred Meyer, Fry’s, Ralphs, Food 4 Less and Smith’s Food & Drugs among others, to the big box outlets like Target and Wal-Mart, Amazon has started with taking on price. But is price really the barrier to entry at Whole Foods? Is price truly a factor to the Whole Foods customer? Or is Amazon rolling the dice with a customer experience makeover before it actually understands the customer's journey yet?
The question needs to be asked if it is the right strategy for Whole Foods to try to compete on price. Afterall, the Whole Foods experience is not just walking into a store to find low priced organic merchandise. You can go to Costco for that. I, for one, go to Whole Foods for the experience…be it the experience of discovery or the experience of new and different organic options that far exceed the one-box-or-none selection at a Costco, Wal-Mart or Kroger.
The Whole Foods experience includes a knowledgeable and really invested staff who want to chat about new and different things to experience, what their favorite product is, or something new they found in the store. The Whole Foods experience includes discovering things like the frozen mochi bar or discovering that yes, olives CAN be a snack for the car ride home thanks to the olive bar. What the Whole Foods experience is not is bargain hunting.
That's not to say that the average Whole Foods shopper isn’t going to be thrilled with a discount. I know I will be. But unless Amazon intends to change everything about the Whole Foods experience, competing head to head with the Krogers and Wal-Marts of the world could actually back-fire causing new and different customers to give Whole Foods a try while alienating loyal customers that know they are paying more for customer experience.
To be sure, this evolution of an Amazon-led Whole Foods experience will be a case study a litmus test for the hypothesis that customers will gravitate towards an exceptional experience AND will pay MORE for that experience.
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