5 Ways Supermarkets Can Compete with Amazon’s Whole Foods

If you believe the media’s frenzied reporting, you might think Amazon’s $13.7 billion acquisition of Whole Foods Market is something like a doomsday event grocers. Just look at some of the headlines:

  • Amazon Deal for Whole Foods Starts a Supermarket War (The New York Times)
  • Analyst Says Whole Foods Competitors Are ‘Screwed’ (Forbes)
  • The Grocery Industry is Panicking about Amazon’s Purchase of Whole Foods (CNBC)

That’s a lot of doom and gloom.

And while Amazon’s aggressive move into grocery certainly presents some questions about competing as a 21st century grocer, longtime grocers know the truth: that those questions were there long before last month’s announcement.

The tech boom in the last decades — and the corresponding change in customer attitudes and expectations — are old news at this point for grocers.

Contrary to what the media might lead you to believe, not all change in our industry is bad change. It’s those same changing attitudes and expectations, after all, that made it possible for grocery stores to better compete with restaurants, introduce more creative loyalty programs, and stock higher-margin organic foods.

One thing the media did get right: customers stand to gain from this so-called disruption in the grocery industries. Savvy grocers will take the news of this acquisition and its ramifications in stride, improve experience in and out of their stores, and reap the benefits of a more engaged customer base.

So then, what can grocers learn from this acquisition, and how can supermarkets improve to compete with Amazon’s Whole Foods?

Make your stores a destination

One smart grocery trend that could become even more important following the news of Whole Foods’ sale to Amazon is the expanding scope of what it means to be a supermarket.

No longer can grocers sit by with the expectation that customers will keep stopping by for staple foods. Being a supermarket in 2017 and beyond increasingly means giving customers new and exciting reasons to stop by.

Increasing your store’s “destination factor” can be as simple as expanding your beer and liquor selection or offering free samples, but some grocers are already testing out more modern offerings, such as in-store coffee or cheese shops, expansive hot bars, and ready-to-go meal kits.

Ensure your online customer experience and offline customer experience are aligned and up-to-date

One of the reasons Amazon acquired Whole Foods in the first place is that it realized most customers need a mix of online and offline shopping experiences — not one or the other.

Most grocers by now have invested considerable time and effort into their online service offerings, but it’s important to make sure you modernize the in-store experience first — there’s no doubt the Amazon-Whole Foods partnership has the resources and motivation to do so.

Increasing transparency and authenticity, implementing a data-centric loyalty program, and ensuring you’re effectively managing expiration dates are particular areas of focus where modern technology can help your stores provide a 21st century customer experience.

Once your in-store experience is up to snuff, focusing on expanding your online interface with features like online ordering for pick-up or delivery should be a major priority.

Focus on freshness

One clear-cut opportunity presented by the Amazon-Whole Foods merger and the buzz around it is for local and regional supermarkets to position themselves as preeminent sources of fresh produce.

As many have pointed out, many customers think of giant, stale warehouses where products sit on shelves for miles when they think of Amazon.

While it’s not totally clear to what extent this reputation will extend to Amazon-Whole Foods’ produce, it seems at the very least to be one more chance for smaller grocers to cash in on their geographic proximity to the farms that source produce.

Double down on local products and their promotion

Similarly, local and regional grocers stand to gain from Whole Foods’ acquisition by a company many customers see as impersonal and omnipresent.

By partnering with other local companies, sourcing products from local suppliers, and — perhaps most importantly — taking care to communicate this local focus to customers, smart grocers can fill any void by Whole Foods’ corporatization.

Put the customer first

The single most important way grocers can compete with Amazon’s Whole Foods is to not focus on competing with Whole Foods and instead focus on the customer.

All the tips you read above and elsewhere about competing in the grocery industry really come back to obsessive focus on the customer and improving the customer experience, which ironically is something Amazon itself is known for.

Conducting thorough research with customers to discover unmet needs and implementing experience-saving solutions like product expiration software can go a long way toward pleasing your customers.

If you’re pleasing your customers, the threat presented by Amazon’s Whole Foods acquisition looks a lot less scary than the media might lead you to believe.

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