Posts Tagged 'Whole Foods'

Why did Walmart acquire Bonobos?

In case you missed it (among the front-page coverage of Amazon and Whole Foods), Walmart acquired men’s online retailer Bonobos last week. RetailWire panelists weighed in on the pluses and minuses of the move, and here’s my take:

The news about Walmart and Bonobos was overshadowed by the Amazon headline on Friday, and understandably so because of the sheer scope and boldness of the Whole Foods acquisition. But Walmart’s news deserves some attention on its own.

This is another case where Walmart is buying a brand that offers more digital expertise and product development skill than the company appears able to build on its own. But there is a disconnect between Walmart’s brand image and the customers who are shopping Bonobos today. Chances are good that the majority of Whole Foods customers are already Amazon Prime members too. How much overlap exists between Bonobos and Walmart, and will the association with Walmart chase away Bonobos’s most loyal consumers?

On Amazon’s bid for Whole Foods

Talk about breaking news: RetailWire panelists had a chance today to weigh in on the announcement of Amazon’s bid to acquire Whole Foods. While many panelists see it as a way for Amazon to gain a bigger toehold in brick-and-mortar retail, I view it differently:

First, the move can help grow Amazon’s brick-and-mortar footprint, but it’s more about taking the Whole Foods brand to every household in America that may order groceries from Amazon. It gives Amazon’s fresh food businesses (meat, produce, organics) instant credibility in homes without a Whole Foods location in sight.

As to the skeptics about whether Amazon can handle the logistics — can they deliver organic produce and Cheerios at the same time — this is the smartest logistics management company in the world that we’re talking about.

Finally, Amazon has a longstanding willingness to lose money in a new business where it is trying to grow market share. The days of “Whole Paycheck” may be over.

Google home delivery grocery partnership with Costco and Whole Foods?

Google recently announced a test of grocery home delivery, partnering with both Costco and Whole Foods in selected markets. This move makes sense to me, as I expressed in a recent RetailWire post:

As the giants of the grocery and e-commerce business (Amazon, Walmart and now Google) enter the fray, the losers over the long haul may be the companies like Peapod who originated the home delivery business. It’s also noteworthy that the two stores partnering with Google have a “destination” (rather than saturation) location strategy where they tend to draw from a wide geographic area. This allows both Costco and Whole Foods to gain share in households not willing to drive 20 miles out of the way to shop in their brick-and-mortar locations.

Whole Foods is developing a new format

Whole Foods announced this month that it is developing a new format, under a different brand name. The goal is to appeal to “millennials” (the brass ring these days) with a smaller footprint, more “curated” assortment and lower prices than a typical Whole Foods store. Here’s my commentary from RetailWire:

This announcement raises several questions about the kinds of issues being discussed inside Whole Foods’ headquarters:

1. Is a new concept the best way to overcome what is apparently a price-perception problem?
2. If we are creating a new store for “millennials,” will we lose them to our core business? If so, why are we continuing to open so many stores?
3. Will a “modern, streamlined design” offer the kind of “foodie” appeal and presentation that drove Whole Foods’ growth in the first place?
4. How, exactly, is the new chain different from the highly curated assortment at Trader Joe’s, Fresh Market and other small-footprint competitors?

Whole Foods may in fact develop a concept that impacts the industry as much as its original stores have done, but for now count me as a skeptic.

Whole Foods and Trader Joe’s: It’s not just about “organics”

In a recent RetailWire panel discussion, I comment on the growth of national and regional grocers taking a strong position on organic or “natural” foods. The question is whether “organic” is sufficient as a brand position to take on Whole Foods and Trader Joe’s. But the bigger issue is whether “natural” is even the key to these two chains’ success. Here’s my point of view:

I question the premise that TJ’s and Whole Foods are successful because they are merely “organic grocery” retailers. So chains trying to crowd into that space (which also has plenty of competition from the big national grocery stores) need some brand differentiation in order to succeed. Fresh Market is another growing chain with a smaller footprint than a typical Whole Foods store.

There is not necessarily anything “natural” about Trader Joe’s well-edited assortment of private-brand packaged and frozen foods. Whole Foods is a lot more than its “organic” positioning because of the “foodie appeal” in its fresh meats and produce. So competitors looking to gain share really need to understand why these two chains are excelling.

Whole Foods develops a loyalty program

From a recent RetailWire discussion, here’s a comment about the news that Whole Foods is testing a loyalty program. My point is that Whole Foods has a terrific opportunity to redefine “loyalty” for many others in the retail industry:

Too many retailers equate “loyalty programs” with price offerings, overlapping discounts, and so forth. There is very little brand-building (or imagination) involved here. In the case of Whole Foods, it seems like a natural candidate to leverage the pre-existing brand loyalty of its customers, who do not equate “value” with the lowest price. Using data collection to discern shopping patterns and preferences will allow Whole Foods to provide targeted messaging to its most committed “foodie” customers without having to lean too heavily on pricing messages.

Whole Foods: The low price leader?

The Bloomberg group did a recent “market basket” study of grocers in Manhattan, and found that Whole Foods is offering lower prices than competitors like Gristedes and Food Emporium. The discussion topic at RetailWire centered on Whole Foods’ value perception and whether this can become a sustainable advantage. My opinion is, “Be careful what you wish for” if it compromises your brand:

Creating a value perception in Manhattan (where price expectations are high) may be easier than on a nationwide basis. The “Whole Paycheck” image dogs Whole Foods across the country, even as shoppers recognize that it offers higher-quality or more specialized goods than you will find at a midtier grocer or discounter like Walmart. But the study raises two key questions:

1. Is Whole Foods’ brand image based on price in the first place?
2. Given the amount of exclusive offerings in a typical Whole Foods store, is the Bloomberg comparison really “apples-to-apples”? (So to speak…)

It’s a tricky balancing act to combat a perception of high pricing without compromising the company’s reputation for quality and uniqueness.