Amazon's grocery swoop could 'transform' sector

Amazon's buyout of Whole Foods Market could transform the groceries industry, Marks & Spencer's top marketer has said.

Whole Foods Market: boosts strategy for a ‘quality supply chain’ behind Alexa
Whole Foods Market: boosts strategy for a ‘quality supply chain’ behind Alexa

In an interview with Campaign at the Cannes Lions International Festival of Creativity last week, Patrick Bousquet-Chavanne explained that the move will help Amazon’s strategy for a "quality supply chain" behind Alexa, its voice-activated personal assistant.

Amazon announced a deal to buy Whole Foods for $13.7bn (£10.8bn) two weeks ago. The premium supermarket chain will continue to operate as a standalone brand led by chief executive John Mackey.

Bousquet-Chavanne, executive director of customer, marketing and M&S.com, said: "It’s a very strategic move for them, transformative po-tentially for the industry as a whole.

"Food online is not a new attempt for them – Amazon Fresh has been going for some time. The challenge is the economic model, the cost of the last mile. 

"If you look at the network of Whole Foods, it’s less than 500 stores, so I don’t think they are taking a large retail footprint, which I think is very smart."

He added that the move marks a "convergence of two opposite and yet complementary strategies" whereby traditional retailers are changing their business models to become fully omnichannel and the tech giants are trying to set up bricks-and-mortar retail operations.

Bousquet-Chavanne explained: "We have to look across all the product categories while at the same time reshape the physical space to cater for the digital world. Then you have the digital pure-plays considering a phy-sical retail play because we all know physical retail will always be there."

Marc Pritchard, chief brand officer at Procter & Gamble, also praised the move. He said: "The brilliance of it is critical integration. In a way, what it means is every manufacturer has to step up their game."

Amazon’s infiltration of the UK shopping basket

November 2015: Launch of Amazon Pantry, a store where Amazon Prime members can shop for everyday essentials such as grocery, household and pet-care items.

June 2016: Amazon Fresh, a fresh-food grocery delivery service, is set up in London seven years after launching in the US. 

July 2016: Dash buttons, which let customers reorder items from Amazon by just the touch of a button, arrive in the UK. Amazon also launches Dash scanner, which can scan the barcode of any grocery item bought on the site. 

October 2016: Amazon launches the Echo and the Echo Dot in the UK, which users can use to either purchase groceries or add items to their Amazon shopping baskets. 

June 2017: Twenty new Dash but-tons are introduced, for brands including Heineken, Kiwi, Glade and Duracell.