Amazon's acquisition of Whole Foods taking us back to the future of food retail?

Most commentators see Amazon's bid to acquire Whole Foods as a game-changing if opportunistic move, with a minority in useful disagreement. The consensus is that Amazon probably does not yet know exactly what it wants to do with Whole Foods, but will experiment until it finds the best way to fulfill its prime aim of satisfying customers. However, to my knowledge no-one has attempted to describe in any detail how Amazon could leverage the stores as delivery hubs more effectively than brick and mortar operators, or question the extent to which the technology being used at its "Go" trial stores could be scaled up to accommodate a much larger range of products, including loose produce and items from service counters, that are a fundamental part of Whole Foods' stores and brand equity.

The first issue depends at least partly on how efficient Amazon's Kiva robotic picking system is compared to others that are aimed specifically at the grocery market. Any advantage Amazon may have today could be negated by next generation systems currently in development, especially if they allow cost-efficient automation at store level.

The second question regarding the scalability of "Go" technology is more difficult to answer, especially as it has yet to be proven effective at the trial stage in very small stores. My belief is that the current configuration of sensors and cameras etc will only work for a limited range of packaged goods - i.e., a convenience store format. However, that does not mean that Amazon will not find other ways of automating the tedious parts of the grocery store experience, notably the selection of center store products, and checkout. 

This leads to the question of whether Amazon will reinvest cost savings from automation to retain or even augment the high touch, human element that differentiates good stores in general, and Whole Foods in particular, from online and offline competitors. CEO Jeff Bezos's oft-quoted (by me at least) view of staff as "annoyingly variable" would suggest not. On the other hand, if he wants to deliver on his prime purpose of customer satisfaction, cutting out the human aspect of personalised service is probably not a good idea. 

Traditional food retailers looking for the usual easy ways to cut costs may want to reflect on this as they wait to see how the Bezos-Mackey marriage works out. 



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