In late August Whole Foods closed a merger with internet retailing juggernaut Amazon. The merger is altering Whole Foods in a huge way: it’s attracting different customers.
That’s not to say Whole Foods had a problem attracting customers. The natural foods retailer opened in 1980,
Population: Whole Foods
There’s a reason why Whole Foods, for years, has been known as “Whole Paycheck”. The often-overpriced produce has drawn the ire of the working class, who can’t justify paying more than two dollars for an organic avocado. The high cost of food is so synonymous with the grocery store that even South Park parodied the issue in an episode called “The City Part of Town”; the writers specifically took umbrage with the retail chain’s contributions to gentrification.
For many years, Whole Foods has served as a beacon to the affluent or middle class. Studies have proven that specialty grocers like Whole Foods or Trader Joe’s drive up property values in the surrounding neighbourhood. On one hand, it may help improve run-down areas, but it could also have the adverse effect of driving out working-class families.
But will this trend continue even after the acquisition by Amazon? Whole Foods hints at a transformation on its website. “Together we’ll pursue the vision of making high-quality, natural and organic food available for everyone. As a down payment on that vision, we’re immediately offering lower prices on a selection of best-selling grocery staples across our stores, with more to come.”
Whole Foods shoppers can indeed carry a sense of elitism. They were the ones who introduced food-related phrases and concepts to the North American lexicon. Methylmercury, sustainable seafood, arsenic in rice, fair trade products. While not new concerns, Whole Foods consumers have helped bring these concerns to the public’s attention. So, it makes sense that the big spenders at Whole Foods feel a sense of ownership over the store. How will they react to an influx of working class customers?
A recent study by IHL Group shows that fashion and department stores are on the decline, meanwhile dollar stores are opening more locations than any other retailer. This trend shows that shoppers are flocking to stores traditionally associated with lower income values. As with any Amazon venture, the online retailer is hoping to make great changes to the grocery retail landscape. It’s less of an appeal to lower income shoppers, than a way to draw more frugal customers.
Along with price matching, Amazon has another plan. They will tie their Prime memberships to a Whole Foods rewards program. Shoppers will be able to order items online and enjoy all the perks, and when it's time to collect their orders, they can do so at the store. Lockers will be installed in Whole Foods locations for customers to access in person.
Amazon has never shied away from bold initiatives, and this is no different. What it will do for Whole Foods remains to be seen. The most significant change, at the moment, is a feeling of greater inclusivity at the store; organic avocadoes are no longer golden goose eggs of myth. Regardless of the retailer’s prior history with the affluent, expanding its customer base is a great first step for both Amazon and Whole Foods.
Alex Correa | The Edge Blog