What Amazon’s Acquisition of Whole Foods Means for UK Consumers
Unless you live in London, Gloucestershire or Glasgow, you’ve probably never shopped at any of Whole Foods’ nine UK stores. This may change with Amazon’s announcement that it is acquiring the high-end American organic/health food grocery chain.
This latest announcement of the acquisition of Whole Foods shows Amazon really is serious about the grocery delivery industry. Amazon already delivers Morrisons groceries to UK households through Amazon Fresh and Amazon PrimeNow, to a growing list of post codes. Whole Foods expands Amazon’s offers with more premium products (e.g., high end, specialty, organic) than Morrisons, at higher price points.
What does this mean for you, as a UK consumer?
Changing Where You Shop, How Much Organic You Buy, Prices and Delivery Times
If you buy organic from an established chain, chances are you currently buy from Sainsbury’s, Tesco or Waitrose, which each supply roughly a quarter of the UK organic market. The stock market views this acquisition as a threat to the incumbent food retailers, as illustrated by stock market drops on Friday 16 June (the day the acquisition was announced).
| Stock Price Drop Friday 16 June | |
|---|---|
| Tesco | -4.92% |
| Sainsbury | -3.85% |
Amazon is not afraid to push the envelope. Their leadership in supply chain management and logistics has reduced delivery times of many products down to next day, then same day (evening) and now within an hour or two of order, in some cases. If Amazon can scale this expertise to a larger range of grocery delivery, more UK consumers can benefit from even shorter grocery delivery times.
UK consumers would likely welcome this feature. Next-day grocery delivery from Waitrose, Sainsbury’s, Tesco, etc. has become commonplace. We expect that same-day delivery of groceries will become just as ingrained in our shopping patterns, if it is readily available – there is surely demand for groceries delivered within hours.
Amazon apparently has plans to lower prices at the notoriously expensive Whole Foods markets, by developing its own food brands (much like Sainsbury's Organics or Waitrose Duchy Organic) to replace products deemed too expensive for the mass market. The Soil Association reported a 7% growth in organic food and drink sales in the UK in 2016, yet organics still only represent 1.5% of the total UK food and drink market. Perhaps there is room to grow and we’ll all be eating even more organic products in the future, courtesy of Amazon.