Amazon’s acquisition of Whole Foods will complete next week – a deal that will upgrade the niche grocer to a genuine disruptor in the UK market.
The news that the $13.7bn deal will go through imminently – and fears of resultant price wars – showed that the ‘Amazon effect’ is alive and well in the UK stock market.
Beyond London reach
With just nine stores in the UK, the bulk of which are in London, it would be easy to think the upheaval in the UK market won’t reach far beyond the kale-crunching elite of South Kensington.
The rise and rise of athleisure-wearing, avocado brunching shoppers has been well-documented in recent years and Whole Foods’ strong brand identity and keen focus on organic produce is well-placed to serve this rapidly growing pool of health-conscious customers.
“Before the ink has dried on the acquisition, Amazon has slashed prices across a range of Whole Food’s staple products including bananas, baby kale, salmon and avocados (all organic, naturally) across all of its UK stores”
But Amazon’s deep pockets and insatiable appetite for innovation could change this dynamic very quickly.
Before the ink has dried on the acquisition, Amazon will have slashed prices across a range of Whole Food’s staple products including bananas, baby kale, salmon and avocados (all organic, naturally) across all of its UK stores.
Whole Foods on Fresh, Now and Pantry
Amazon will also dramatically expand the upmarket grocer’s UK online reach overnight, offering a selection of products to its Amazon Fresh grocery division across 302 postcodes in London and the South East to vie for trade alongside big four grocer Morrisons, which also sells on Fresh.
Whole Foods products will also be available on Prime Now in selected areas and on Prime Pantry nationwide.
UK shoppers will be given a host of new reasons to step into a Whole Foods in the form of Amazon lockers, where they can pick up and return online purchases – and perhaps pick up some affordable free range rotisserie chicken whilst there.
Amazon has made a push into bricks-and-mortar in the US through bookshops and futuristic grocery stores but, to date, its forays into standalone physical space have not made their debut in the UK.
While its Whole Food acquisition does not look likely to change that overnight, it’s clear it has big ambitions for the business.
If anyone were in doubt that Amazon plans to make a serious splash in the UK food sector through Whole Foods it’s worth remembering that Amazon’s UK division is led by supermarket veteran Doug Gurr, who spent five years as Asda’s development director.
Much was made of Gurr’s grocery credentials when he took the helm last year and this acquisition will certainly give him something to get his teeth into.
Just a few months ago, if asked to list grocery’s biggest disruptors Whole Foods would not have come into it – it’s doubtful the same will be true a year from now.