Study: High expectations for Amazon-Whole Foods merger
Nearly a quarter of American shoppers give the Amazon-Whole Foods merger a nod, just 10% frown upon it and the rest feel neutral, according to a new report, which surveyed 1,000 U.S. shoppers, from market and consumer information research firm GfK.
According to the report, emailed to Retail Dive, Amazon and Whole Foods have significant overlap in their core bases; 74% of Whole Foods shoppers made at least one Amazon purchase in the past month, far more than the average non-Whole Foods shopper, 49%. Just 14% of U.S. consumers shopped at Whole Foods in the past month, and 9% are buying groceries online, an indication that the deal is spurring interest in the idea, according to the report's authors, Wendy Wallner and Stephanie Scalice.
Some 38% of existing Whole Foods shoppers believe the tie-up will be positive and even more — 43% of those who shop both — are looking forward to it, according to the report. With the new deal come new expectations — that grocery prices will decrease and delivery will be free for Amazon Prime members — but shoppers hope Amazon won’t tinker much with Whole Foods' strong points.
Among the improvements that Whole Foods shoppers want to see from a merger between the two is that Whole Foods’ prices will come down — which surfaced in GfK’s research as well as in a report last month from GlobalData Retail. GlobalData found that 78.5% of consumers say they don't shop at Whole Foods because prices are too steep. “Amazon has a better price perception than Walmart these days, which is amazing,” Wallner said. “[Shoppers] hope that that gets taken care of at Whole Foods.”
That could be something of a challenge, considering Amazon, despite its reputation, doesn’t always have the best prices, according to research from Wikibuy. In fact, Consumer Watchdog, which last month released a report claiming that Amazon’s pricing is often deceptive, has prompted the Federal Trade Commission to scrutinize the e-commerce giant's advertised discount prices as it conducts its antitrust review of the acquisition. In a statement, an Amazon spokesperson described the study to Retail Dive as “deeply flawed, based on incomplete data and improper assumptions.”
Unlike Walmart, which suffers from a perception that its low-priced goods are of low quality, even when they’re the same items sold elsewhere, Amazon has a higher level of trust from its shoppers, Wallner said. That means an Amazon-Whole Foods tie-up could help move the needle on online grocery shopping by building on its track record for delivering fresh foods.
While Whole Foods shoppers are feeling mostly positive about the deal, they do worry Amazon will over-run the grocer with an overly corporate, homogenized identity and that it could hurt other local businesses, Wallner said. “That’s something to worry about — consumers will not like it if the local products go away,” Wallner said.
Consumers hope Amazon will actually help expand Whole Foods. While many are looking forward to technological and fulfillment improvements that Amazon will bring to the chain, they hope the company will maintain its essence, Wallner said. "I expect them to leave it 'Whole Foods,'" she said.
While Amazon is entering this partnership with good will from Whole Foods' customers, they have to be careful about the changes they make, warned Wallner, who says she expects a lot of testing and slow rollouts of any changes. But Amazon needs a good handle on what it brings to what will be its biggest brick-and-mortar expansion to date.
“If Amazon’s play is just convenience — that’s not going to be enough,” she said. “As long as Amazon realizes that this is an omnichannel play and not an online play, that Whole Foods can teach them something about merchandising,” they will succeed.
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