Reflections on the Whole Foods Acquisition

It’s hard to believe that a mere 20 years ago, the only reason a consumer would visit was to buy books. And now — through a combination of innovations and acquisitions — shoppers are able to purchase just about anything they could ever want from Amazon — from electronics and toys to apparel and jewelry.

And now, Amazon has its sights set on grocery. A few years ago, Amazon launched Amazon Fresh, its grocery delivery service. And earlier this month, the ecommerce giant announced it would acquire Whole Foods for $13.7 billion, which has the potential to dramatically disrupt the way consumers shop for groceries.

The Next Frontier for Ecommerce
According to the U.S. Department of Commerce, ecommerce accounted for 11.7% of total retail sales in 2016. That’s a 15.6% increase over 2015. While more and more transactions happen online, grocery has traditionally fallen behind — especially in the U.S.

Though the majority of groceries are still purchased in a store, there is definitely a growing trend of consumers who are shopping for food online. In fact, this trend will likely accelerate with the Whole Foods acquisition, and I’d argue that grocery will become the next frontier for ecommerce.

Now, that’s not to say that traditional grocery stores will be a thing of the past. Instead, consumers’ expectations will evolve, requiring grocery retailers to rethink the way they operate.

Brick and Mortar Isn’t Going Away
It seems like we’re constantly bombarded with headlines about another retailer closing its brick and mortar locations. But there’s also plenty of evidence of another trend — online-only retailers such as Fabletics, Warby Parker, and yes, Amazon — opening physical store locations. In fact, when I recently attended an IRCE presentation by Gregg Throgmartin, President and General Manager for Fabletics, he argued that “It’s one of the best times to open a brick and mortar store.”

Obviously, ecommerce continues to grow, but physical stores provide the opportunity to experience products first hand — an experience consumers simply can’t get when they’re shopping online. A shopper can feel the fabric of a dress or try on a new lipstick shade before committing to a purchase. Or, in the case of Whole Foods, she can hand select her own produce.

But stores can no longer survive by simply being a place to conduct a transaction. Today, consumers go to a store expecting to be entertained and inspired.

Clearly, Amazon recognizes the consumer’s desire for great in-store experiences, which is why they chose to acquire a grocery chain that goes beyond the transaction. For example, at the Whole Foods store in the Lincoln Park neighborhood of Chicago, visitors can enjoy a glass of wine after work, meet a friend for lunch, or enjoy a children’s cooking class with the family. These unique experiences allow consumers to connect with the brand on a deeper level — and likely lead to future purchases. The consumer that attended a wine tasting opts to purchase a few bottles of the wine they tasted for a housewarming party. And the mom that attended the cooking class returns to Whole Foods to purchase the items needed to recreate the meal from the class.

It’s Time for Grocery Retailers to Marry the Online and In-Store Experience
If you’re a grocery retailer, don’t be discouraged about the news of Amazon’s acquisition of Whole Foods. Instead, use this as an opportunity to rethink your in-store and online strategies and focus on creating a seamless shopping experience for shoppers across all channels.

Leverage Your Brick and Mortar Stores
If you have brick and mortar grocery stores, think of ways you can leverage this asset to create memorable experiences for your shoppers that go beyond a transaction. For example, offer cooking classes that’ll entertain and inspire consumers. Or offer spaces and opportunities for shoppers to socialize. According to a Capgemini study, 60% of consumers want stores to provide a social experience with friends and family.

Offering rich experiences to your in-store shoppers will allow you to forge deep connections with them. And I’m willing to bet that those who visit your store for a cooking class or a wine tasting will stay to pick up some groceries, too.

In addition, look for opportunities to leverage your brick and mortar stores as a tool to help drive your online success. One way retailers are doing this is by offering in-store pick up of ecommerce sales. For example, 55% of all digital sales for Target are fulfilled in-store. Offering this service not only saves your customers time, it also has the potential to drive additional in-store sales.

Finally, think of ways you can bring the online shopping experience to your brick and mortar stores, something Amazon has done extremely well with their physical book stores. Start by making sure that all of the information available to your shoppers online is also available in store. For example, prominently featuring star ratings and reviews alongside your products to boost customer confidence.

Bolster Your Online Presence
A growing number of consumers are browsing for and purchasing groceries across channels. According to a study by Nielsen and the Food Marketing Institute, 23% of American households are buying food online today. And 72% of shoppers expect to buy groceries online in the future.

Now’s the time to bolster your online presence. For starters, make sure your website provides a great user experience for your shoppers and includes plenty of information about your products and your stores so shoppers know exactly what to expect. PowerReviews research found that poor product information is the top irritation for consumers when browsing for products online.

In addition to your own product descriptions, be sure to prominently feature product ratings and reviews on your website so consumers can hear about the experiences of other consumers. As an added bonus, user-generated content — such as ratings and reviews — can ensure your product pages are showing up in search engine results.

But it’s not enough to simply collect reviews. Instead, be sure you’re regularly monitoring reviews and acting on the insights they provide in order to improve products and the customer experience.

I’ve said it before, and I’ll say it again. Retailers that survive — and thrive — are those that successfully marry the online and in-store shopping experience. Rather than being discouraged by the Amazon acquisition of Whole Foods, use this as an opportunity to rethink your online and in-store strategy.

User-generated content, such as ratings, reviews, images and Q&A, plays an integral role in a consumer’s path to purchase. Because of this, companies can be tempted to modify this content to ensure that shoppers are more likely to complete their purchase.

The Federal Trade Commission oversees consumer protection to prevent companies from engaging in this harmful and fraudulent behavior. In this webinar featuring Lesli Esposito from DLA Piper, we will take a look at the do’s and don’ts of reviews from the legal perspective.

View this webinar and you will:

  • Take an in-depth look at the Federal Trade Commission and how it enforces consumer protection
  • Explore what the new administration prioritizes in consumer protection
  • Learn how to successfully navigate the Consumer Review Fairness Act

Featured Presenter

Lesli Esposito | Partner | DLA Piper

Lesli C. Esposito focuses on complex commercial litigation and government investigations, concentrating in the fields of antitrust and consumer protection. She represents a wide range of corporations, as well as individuals, as both plaintiffs and defendants.

Lesli has extensive experience litigating antitrust and consumer protection matters in both federal and state courts, as well as representing parties in class actions. She also has extensive experience representing clients in antitrust and consumer protection government investigations, including investigations conducted by the Department of Justice, Federal Trade Commission, Consumer Financial Protection Bureau, Department of Transportation, Federal Aviation Administration and state Attorneys General.

She represents clients in a variety of industries, among them pharmaceuticals, healthcare, consumer products, telemarketing, oil and gas, mortgage lending and legal services. Her matters have involved a wide range of claims, including but not limited to allegations of price fixing, abuse of monopoly power, conspiracy, false advertising, and tortious interference, as well as alleged violations of various FTC, FCC and FDA regulations, such as the Telephone Consumer Protection Act.

IRCE Key Takeaways Part 1

This blog is the first in a series of key takeaways from the 2017 Internet Retailer Conference and Exposition (IRCE).

Earlier this month, I had the opportunity to attend the annual Internet Retailer Conference and Exhibition (IRCE). IRCE is one of my favorite events of the year — partially because the event is held right in PowerReviews’ hometown of Chicago — and partially because I’m always impressed with the great content and networking opportunities it provides for ecommerce pros.

Barbara Corcoran from Shark Tank kicked things off on the first day of the event. Barbara has a really interesting success story, borrowing $1,000 to start a real estate company when she was 23 years old, which she went on to grow into a $5 billion business. Based on her own success — as well as the experiences of businesses she’s invested in over the years — Barbara shared insights with the audience on how to take risks and be more successful. She also challenged folks to see mistakes and setbacks as opportunities to forge new paths to success. It was a really energizing way to kick off IRCE 2017.

Subsequent breakout sessions focused on a wide range of topics — from digital marketing and customer service — to omnichannel strategies and how to be successful on online marketplaces.

While attending sessions on Wednesday and Thursday, I noticed a few key themes emerge.

  • The value of brick and mortar retail and the importance of creating a truly omnichannel experience
  • How mobile is changing the way consumers shop
  • The role of video in the customer journey

In this blog, I’ll focus on the first theme — creating an omnichannel experience for your shoppers. Future posts will focus on the other themes.

Providing a Seamless Experience Across Channels
I attended a session presented by Tony Fross, Vice President of Digital Strategy for Capgemini Consulting. Tony shared the results of a survey Capgemini conducted, which identified consumers’ frustrations with in-store shopping. The survey found that 32% of consumers would rather wash dishes or do laundry than go shopping in stores.

This is probably a discouraging stat for brands and retailers with physical store locations. But it doesn’t have to be. Tony went on to discuss how customer frustrations with the in-store experience are inherently linked to the conveniences of online retail. This is a big opportunity for retailers to bring key aspects of the online shopping experience, in-store.

Using Online to Enhance In-Store, and Vice Versa
It seems like everyday, we’re bombarded with headlines about another retailer closing stores. But contrary to what many may think, there is still tremendous value in brick and mortar retail. In fact, according to Gregg Throgmartin, President and General Manager for Fabletics, “It’s one of the best times to open a brick and mortar store.” Fabletics — previously an online-only retailer, recently opened 18 retail stores in 13 months and has experienced tremendous success both online and in-store. In fact, Fabletics has found that customers who shop both channels are happier — with 32% higher NPS scores, 231% higher lifetime value, and 121% more purchases (and post IRCE, we have the Amazon acquisition of Whole Foods, in case you need further proof of the importance of the value of the in-store experience).

The secret is to successfully leverage digital and physical store assets to enhance each other — something Fabletics does well. For starters, the brand has built a fitting room experience that does a great job providing in-store shoppers with assets and information they’d typically only get online. For example, fitting rooms feature localized user-generated content. So if you’re in the fitting room of a Fabletics store in Chicago, you’ll see user-generated content that was submitted from other consumers in Chicago. This content can provide inspiration and ideas to in-store shoppers — which can lead to larger transactions.

In addition, personalized digital signage in fitting rooms allows for cross-channel purchases. If you try on a few items in-store but decide not to buy, these items will be saved in your cart so you can easily purchase online later without having to search for specific products and remember which sizes worked for you.

Fabletics also leverages in-store feedback to improve products and the customer experience across all channels. For example, in a store, associates can get feedback from shoppers about why they chose not to purchase a particular product. This can help inform online product descriptions or even changes to the product itself. Gregg mentioned that the in-store conversion rate of a particular pair of leggings was 81%. However, they found that the conversion rate for the XS size was only 74% and the conversion for the XXS size was 51%. Thanks to in-store feedback, they identified a size-grading issue with the XS and XXS leggings regarding fit in the calf area. As a result, the design team worked with production to address the fit issue and improve the conversion rate for these smaller sizes.

People-Powering Your Website
There’s a ton of chatter about omnichannel retail. But the truth is, in most cases, consumers aren’t getting a seamless shopping experience across in-store and online channels. For example, if a shopper is in a department store receiving help from a sales associate, that connection is lost as soon as the consumer leaves the store.

Saks Fifth Avenue is changing that. I attended a session led by Joe Milano, Senior Vice President, General Manager, Digital Retail for Saks Fifth Avenue and Oscar Sachs, CEO of Salesfloor. During the session, Joe discussed how Saks was generating a lot of traffic to its website, but its sales associates were best at making connections with shoppers and closing a deal. Saks saw an opportunity to “people power” its website, allowing customers to shop online directly with their favorite local Saks Style Advisor. Each Style Advisor can create their own personalized version of the Saks’ website with personalized product recommendations and live shopping experiences.

Shoppers who don’t have a preferred Style Advisor can connect with a local associate via live chat or a texting platform directly from the retailer’s website. By doing so, they can receive the personalized, 1:1 assistance they’d receive in a Saks store.

Brick and mortar is very much alive and well, and many consumers are still opting to shop in a physical store. The brands and retailers that will be survive — and thrive — are those that successfully connect the online and in-store experiences.

What was your favorite session from IRCE 2017? Please share in the comments below!

The retail landscape is constantly evolving, thanks to many factors including technology advancements, new (and different) competition, global market shifts, and the ever-changing expectations of shoppers. Businesses that don’t adapt to keep up with these changes risk losing consumers to businesses that do.

In the midst of these changes, nearly every CMO is being asked the big strategic questions: What will happen, how should our strategy change in order to win, and will you have an answer by tomorrow?

In order to remain competitive in this ever-changing landscape, CMOs must go back to the strategy drawing board. Watch this recorded webinar with Kim Feil, former CMO of OfficeMax, Walgreens, and Sara Lee, as she shares strategies marketing leaders can use to navigate change and effectively compete and win.

Featured Presenter

Kim Feil | CEO | bizHive

Feil leads and consults on transformations by working with companies to formulate profitable value propositions to tap unrealized competitive advantage.

She has been a retailer, general manager, consultant and ecommerce leader in marketing, sales and strategy at OfficeMax, Walgreens, Sara Lee, Kimberly-Clark, Information Resources Inc, Dr Pepper/7UP and Frito-Lay, giving her a unique 360-degree multi channel perspective.

She serves on the boards of On the Border Mexican Grill & Cantina and Krystal Co. and is advisor to RetailNext, Aspire Healthy Energy Drinks and 12 Digit Media. She is a past board member of Roundy’s. She has been named a “Woman to Watch” by Ad Age, Crain’s Chicago Business, and Consumer Goods & Technology magazines; dubbed a “futurist” by Fortune Magazine; and recognized by Advertising Women of New York in 2010 for “Changing the Game.”

She is inducted in the In-Store Marketing Institute Hall of Fame. She is president of the CMO Club-Chicago, serves on the Global Retail Marketing Association Advisory Board, and was Chair of the 2014-15 American Heart Association Chicago Go Red for Women campaign.