Can Amazon/Whole Foods Save Consumers Time While Shopping?
It’s widely known by now that Amazon.com acquired Whole Foods Market allowing Amazon further penetration into the fresh grocery world. Should we expect this to disrupt the grocery industry, or would a change even be noticed? Looking into the dynamics of online grocery shopping could yield answers.
One in five U.S. adults purchased a grocery item online in the past three months, shown by our Virtual Grocery Store report. The vast majority of them are repeat users, signaling high satisfaction scores. Consumers say the biggest reasons they use online grocers is because they don’t have to leave their home; it saves time. The top items they buy online are snack foods and beverages. Fresh items are among the bottom items purchased. This represents a barrier to usage: two-thirds of adults say they want to pick out their own fresh foods, which often sends them to a brick-and-mortar store for those items. Incidentally, online grocery shoppers say 76 percent of their dollars still go to brick-and-mortar stores so if Amazon wants growth in fresh food sales, its path needs to include an off-line component.
However, fresh food consumption is on the rise, which might have been part of Amazon’s desire to enter the fresh grocery business. Our National Eating Trends information shows all groups under age 40 consume more fresh foods compared to their cohorts 10 years ago, revealing a generational shift in behavior. It represents a departure from the decades-long growth of products that lowered time requirements in the kitchen for consumers, and as more consumers opt for fresh foods they naturally need to spend additional time preparing those items. Spending more time in the kitchen isn’t exactly a welcome thought among consumers who still allocate around 30 minutes to prepare their dinners.
There is a Path to Consumption® that includes food acquisition, preparation, cooking, and restocking. Each step on the path represents an area where consumers can save time to make up for the extra time involved with preparing fresh foods. Fresh meal kits are an example of how consumers are preparing more fresh foods while minimizing time spent elsewhere, such as in the grocery store or just determining what to make.
Amazon is famously known for efficiency in delivery and service. Whole Foods has a reputation for high quality foods, including fresh foods. Will Amazon bring its delivery and service methods to Whole Foods? It’s hard to say at this point, but both companies recently made investments to court the younger adults who use fresh foods in greater numbers. Amazon is testing a brick-and-mortar concept store called Amazon Go that has no check-out lines. Instead, the basket detects the items in it and automatically charges the customer’s account on the way out of the store, saving check-out line wait time – another example of cutting minutes along the Path to Consumption. Meanwhile, Whole Foods is opening a new banner called 365 by Whole Foods, which largely sells its private label products in an attempt to bring in younger, cost-conscious consumers.
Once Amazon has access to Whole Foods’ distribution centers it might be able to change the game when it comes to food delivery. As it stands now, roughly 43 percent of Americans or about 140 million people live in an area serviced by Amazon’s same-day delivery. These are mostly urban and suburban areas that have high overlap with Whole Foods’ service areas.We’re watching this acquisition as it unfolds. If you have questions about virtual grocery shopping please contact firstname.lastname@example.org.