Re-Inventing Retail

From the Co-Founders of The Retail Owners Institute.
Tips | Tactics | Insights on the Business of Retailing.

Why Omnivorous Amazon Gobbled Up Whole Foods Bookmark

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So, Amazon announced its plan to acquire Whole Foods, the 440 store natural foods grocer concentrated in urban locations, for more than $13 Billion (yes, with a b). They do have a flair for the dramatic, eh?

So, why does Amazon want to acquire Whole Foods? 

Our opinion:
Amazon is a technology company, and relentlessly data-driven. 

We believe they want to acquire Whole Foods for the same reason that drives acquisitions at most technology companies: Amazon wants the Intellectual Property of Whole Foods.

What is the "Intellectual Property" of Whole Foods? Two key assets that do not show up on the Balance Sheet.
  1. How to do “real retailing”, (an "Intangible Asset")
  2. The Whole Foods customers (their most valuable "Other Tangible Asset") 

First, “real retailing”. All of the operational things Amazon has shown little patience for.

How to operate real stores: How to staff them; keep them open 18 hours a day; deal with “clean up on Aisle 7”. 

How to keep the shelves stocked; receive the merchandise; deal with returns.

How to deal with spoilage; display the merchandise; answer questions on where are the restrooms.

How to handle the cash(!); maintain security.

How to deal with the General Public IRL ("in real life"); etc; etc; etc.

And, the Whole Foods customer.

There is a great overlap of the Whole Foods customer with Amazon's coveted Prime customers. (It’s been reported that 60%+ of Whole Foods customers already are Amazon Prime customers.) 

Whole Foods has attracted and retained the loyalty of “Prime type” customers. 

And Whole Foods has done all this in the highly competitive grocery segment.

Amazon cares about delivering “good customer service”, and wants to learn only from one of the best. 

(In fact, we wondered whether Nordstrom’s contemplation of going private could lead to their acquisition by Amazon as well. But that’s for another day.)

So, our take-away:

Amazon’s $13 Billion acquisition of Whole Foods Market is the ultimate tip-of-the-hat to “real retailers” everyday. All of you who make doing retail look so easy!

But look out! While Amazon knows and respects what they don’t know, they are a very quick study. 

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About The Co-Founders

Pat Johnson and Dick Outcalt, The Co-Founders of The Retail Owners Institute®, have been called "The Zen masters of retail finance!"

Since 1999, they have been assembling  their proprietary content into a unique self-help website. The Retail Owners Institute is an unmatched resource that assists retailers worldwide with basic financial training, assistance and easy-to-use tools.

Their engaging and empowering how-to resources about the financial levers in retailing are informative, fun(!), and retailer-friendly. Their promise: "Everyone will 'get it'!"

Pat and Dick are recognized experts in strategic retailing. Working only as a team – Outcalt & Johnson: Retail Strategists, LLC – they have been consulting, publishing, and speaking professionally throughout North America since 1990.

They focus exclusively on retail, or wherever retail is involved. They work with CEOs, CFOs, boards and owners of retail operations, as well as manufacturers or wholesalers expanding into retail. And they also are Retail Turnaround Experts.

Since 1999, empowering retailers and store owners to "Turn on your financial headlights!"