Amazon’s Whole Foods buy may usher in the store of the future
Big changes may someday be coming to Whole Foods, including delivery drones, no checkout lines and (gasp) lower prices.
In March, the New York Post published a story claiming that Amazon was considering an automated, two-story supermarket that used robots on the top level to collect and bag items for shoppers downstairs.
The concept was so crazy that Amazon CEO Jeff Bezos took to Twitter to argue that the Post's anonymous sources "mixed up their meds!"
Sure, Amazon probably isn't going to build a robo-supermarket, but the e-retailer's $13.7 billion acquisition deal for Whole Foods strongly suggests that the way we shop and what stores look like will drastically change, and faster than expected. Amazon is already developing several innovations it could someday roll out to the high-end grocery chain, such as a store with no checkout lines or cashiers, delivery drones and aisles with barcodes instead of price tags.
"This gives Amazon a playground" to test out new concepts, said eMarketer analyst Patricia Orsini.
Heck, there's even a chance Amazon's purchase could push down prices at Whole Foods to keep with Amazon's low-price reputation.
Even if Amazon does nothing to change Whole Foods' technology, the perception that it will should drive more stores to ramp up their techie offerings for fear of getting left behind. For customers, that means even more digital experiments will crop up at your local supermarkets and superstores, as Target, Walmart, Krogers and others try to invent the store of the future before Amazon does. And more automation could spell fewer jobs or layoffs for retail workers.
For now, Whole Foods and Amazon customers probably shouldn't expect big changes. The deal, announced Friday, is slated to close later this year. Even after that, Amazon took pains to show that Whole Foods would remain its own entity, with CEO John Mackey still at the helm and its headquarters staying in Austin, Texas. Amazon also said there are no plans to add its no-checkout, no-cashier technology into Whole Foods. And there probably won't be a new Amazon devices section next to the peanut-butter grinder.
Changes in store
Looking further into the future, it's likely that Amazon will start using Whole Foods' 460 grocery locations as distribution points to power the company's online grocery and retail sales. Amazon has been slow to build up its AmazonFresh grocery delivery business, but these hundreds of Whole Foods spots could help change that.
"Its goal changes from the place that you buy things to the place you buy things and an intelligent, local warehouse," Arun Sundararajan, a New York University Stern School of Business professor, said of Whole Foods locations.
Other retailers have already started doing the same thing, with Target and Walmart using their stores to fulfill online orders. Whole Foods and other grocers already offer buy-online, pickup-in-store options and grocery delivery through Instacart, Peapod and other services.
Sundararajan added that the deal could create "a version of Instacart on steroids," using Whole Foods' well-placed stores and Amazon's delivery know-how. Utilizing these stores as hubs for delivery drones is also a futuristic possibility.
Another idea Amazon is developing is called "Just Walk Out Shopping," which lets people log into a store at turnstiles using their phones, pick up whatever item they want, then walk out. The idea is being developed at a convenience store called Amazon Go in Seattle, but the location hasn't yet opened to the public and it's rumored to have tech problems. The store was initially slated to open in early 2017.
Adding Amazon Go's technology to a Whole Foods would be difficult, since the grocery locations are much larger and include many more items than a convenience store. It could happen someday, but don't expect it to arrive anytime soon.
In its Amazon Books stores, there are hardly any price tags. Instead, shoppers scan barcodes of books using their phones, so they can access pricing, reviews and more details on the selections. The stores also heavily rely on Amazon data to stock inventory, for instance, only bringing in books that get high customer ratings.
It's possible these idea, too, could find their way into Whole Foods, but it may annoy customers to scan every bag of arugula or box of organic multigrain cereal to find out the price.
Additionally, there could someday be a tie-in with Amazon's popular Prime membership, which has over 80 million US members and draws in a high-income clientele similar to Whole Foods.
One more thing that may change under Amazon's regime: price. Whole Foods has spent decades convincing customers its grocery items are worth a premium, earning itself its "Whole Paycheck" reputation. Yet, the company has fallen on harder times as more supermarkets started selling the organic and natural foods that have been Whole Foods' bread and butter.
With Amazon's purchasing power, reputation as a low-price retailer and apparent disregard for near-term profits, Whole Foods may start offering cheaper prices for those salmon burgers and Talenti gelatos.
Well, at least, one can hope.
Does the Mac still matter? Apple execs tell why the MacBook Pro was over four years in the making, and why we should care.
Tech Enabled: CNET chronicles tech's role in providing new kinds of accessibility.