While everyone talks about what the online behemoth’s acquisition of Austin-based Whole Foods means, could it just be an error of judgement?

I read my colleague George MacDonald’s comments on the $13.7bn (£10.7bn) acquisition of Whole Foods by Amazon with interest and found myself agreeing with him – up to a point.

That point was about ‘disruption’ – because the term implies a market advantage is gained.

Mismatched propositions

In this instance, it is worth reconsidering some facts.

Amazon is the great leveller; retail democracy in action, a shop for everyone. Whole Foods is not.

The latter may have hundreds of stores in the US, but that country is a very large pool in which to fish and the demographic heading into a Whole Foods store is both affluent and prepared to pay a premium. 

Whole Foods stores are about abundance, freshness and making shoppers feel that they are having an experience, as well as buying some food.

As such it is not for everybody – the prices make this a self-selecting certainty.

Brand compromises

How comfortably does this sit with Amazon and what will the online giant need to do to make Whole Foods accessible to all?

Almost certainly, it will have to lower prices in stores and offer Whole Foods as a proposition online.

Sound sensible? Perhaps, but shopping at a Whole Foods store is a trade-off between price paid and the visual merchandising experience.

If prices are lowered considerably, there is a real danger of the shine being taken off the brand.

If this is a method of getting into the mass market, it might seem a mite misguided.

In the Amazon scheme of things, $13.7bn is not going to break the bank.

But maybe it is the case that turning Whole Foods, online or in the physical stores, into a creature for the mass market might run the risk not just of compromising a successful retail formula, but even of costing a great deal more than $13.7bn and without any guarantee of success.

“This is disruption without market advantage”

Amazon could perhaps have done worse than consider what it might have done with Trader Joe’s, the mass-market food retailer in the US, although Aldi might have demanded a high price even supposing it was prepared to part with it.

Whatever the case, this is disruption without market advantage, and turning it into something else may result in something that shoppers just don’t want.

As an additional point, Amazon’s performance in the food sector remains questionable.