Doing Business | Sales & Marketing

June 20, 2017

Amazon Makes Whole Foods Mecca For Millennials

Whole Foods Market has delivered on many attributes key to millennial shoppers, yet has not established itself as their grocery store of choice. Despite investment and innovation against this key demographic, Whole Foods has yet to crack their code. Acquisition by Amazon may close the gaps needed to make Whole Foods Market millennials’ retailer of choice.

Millennial Must Haves

On the plus side, Whole Foods has demonstrated brand authenticity with customer perceptions of integrity in brand standards and product offerings, a hot button for the elusive demo.

Whole Foods’ emphasis on wellness meets another millennial mandate. Whereas “healthy” perceptions are often grounded in the absence of negatives like preservatives and artificial colors, “wellness” connotes larger benefits that can improve quality of life. Whole Foods delivers on holistic positive experience far beyond what Albertson’s, Aldi, Kroger, Target, or Walmart ever could.

A phoenix from the antiquated concept of health food stores with dusty bins of dried legumes and cardboard boxes of sprouting greens, Whole Foods created gorgeous showrooms for food with a sensory feast of color, smell, taste, and touch. Its offerings are touted not just for the absence of “bad” attributes but also for their proactive and positive powers such as fruits replete with anti-aging oxidants, and essential oils and supplements that may improve sleep quality, muscle tone, and cognitive function.

Whole Foods’ environmentally friendly packaging and sensitivity to fair-wage practices of manufacturers squarely deliver on millennials’ desire for corporate social responsibility.

Employees are knowledgeable and excited about their products, including fish mongers who are experts on sustainability best practices, and wine clerks who could shame some sommeliers. This sort of expertise reflects the professional pride and passion in work that millennials crave, both for themselves and in others.

But Whole Foods doesn’t stop at its rich product array. Services like in-store chair massages, craft beer bars, and pressed juice samples seek to transform the chore of grocery shopping into a weekly opportunity for discovery and self-renewal. Their emphasis on overall physical and mental wellness hits the sweet spot of millennial desires.

So with Whole Foods doing so many things right for so long, why hasn’t it won millennials?

Price Is a Problem

Although high-quality offerings are appreciated, prices are considered too high for everyday shopping needs, forcing Whole Foods into the undesirable “special occasion” and “feeling flush” quadrant of purchase decisions. Management has long fought the “Whole Paycheck” perception with studies proving that the prices of its “everyday” products were actually quite competitive with other grocery stores. Whole Foods punctuated this fact by launching its 365 house brand, named specifically to suggest that its staples are appropriate for everyday use. Although a noble marketing concept, the 365 product line hasn’t come close to conquering negative price perceptions.

The launch of the 365 branded stores, the subbrand was specifically targeted to millennials with smaller footprints in urban areas and lower-priced products. But the stores have been slow to open, with just a handful to date.

Whole Foods Is Woefully Behind in Technology

For Millennials, a retailer’s use of technology is a key attribute to trust, innovation, overall quality, and relevance.

Enhanced services, especially home delivery, have evolved from a benefit to an expectation in millennial households. Instead of offering a proprietary online shopping option, Whole Foods chose to partner with Instacart. Although not necessarily a bad idea for Whole Foods to tap into the sharing economy of independent contractors handling shopping and delivery, Instacart offers them no competitive insulation. The very same freelance shoppers buying at Whole Foods also shop at Costco, Safeway, and Target, ultimately giving buyers the exact same experience for all retailers in Instacart’s portfolio.

Another item on the list of Whole Foods technological shortfalls: decades into the life cycle of sophisticated loyalty marketing, Whole Foods Market still doesn’t have an affinity program, despite discussion of supposed tests in quarterly investor calls. Is it surprising that the perception of special occasion shopping isn’t diminished when shoppers are without incentive to visit more frequently?

Beyond increasing shopping frequency, retailer “clubs” are key to creating and fostering consistent customer dialogue. In this age of information, millennials judge companies by what they share. Corporate silence is met with suspicion.

Amazon Is the Answer

Already hitting the hot buttons of wellness, authenticity, and quality, Whole Foods has still fallen short with many millennials. But with Amazon ownership, its current deficits could be overcome almost instantaneously.

Easy and intuitive online shopping? Check.

Fast and reliable home delivery? Check.

Frequent exchange of information between seller and buyer? Check.

Opportunity for loyalty and replenishment programs? Check.

The combination of procuring high-quality products from the physical world with sophisticated technology for doorway delivery is a millennial dream come true. Swipe right if you agree.

Text by Forbes
 

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