More work to be done.
One year ago Saturday, Amazon (AMZN) shocked Wall Street by announcing its plan to acquire struggling Whole Foods Market for $13.7 billion. But not everything has gone according to the online retail giant's plan. Here's a look at what Amazon still hasn't been able to figure out at Whole Foods.
Shedding Whole Foods of its "whole paycheck" moniker was one of Amazon's primary goals when it first took control of the health food chain in August 2017, but the price cuts didn't continue into the new year.
"Shoppers have noticed a lot of pricing changes at their local Whole Foods since the acquisition by Amazon, but how did those price changes compare to other local stores?," Andy Ellwood, co-founder of grocery price comparing app Basket asked. "Basket showed all local shoppers that while some eye catching reductions on popular items were actually the lowest those items had been in the past few years at Whole Foods, other 'sales' were simply getting the prices back to previous everyday prices."
In the year since the deal, the company has been plagued by complaints over messy stores and out of stock signs, upsetting faithful customers used to Whole Foods' robust customer service while failing to attract thrifty Amazon shoppers.
"The two business models are opposite in strategic positioning, and more importantly, in the appropriate supply chain infrastructure to make them successful," Burak Kazaz, Professor of Supply Chain Management at Syracuse University's Whitman School of Management, said. "They were able to reduce costs and drive a higher demand. However, this created a bigger problem of shortages, which hurts the current positioning of Whole Foods on the service dimension."
Kazaz still thinks it isn't too late for Amazon to turn Whole Foods around, however.
Adding another selling point for Prime memberships is one the best long term benefits Amazon got from purchasing Whole Foods, Gordon College finance professor Alexander Lowry said, but Amazon has yet to roll out the benefits nationwide. Prime members can save 10% on select items at Whole Foods and get free two hour delivery only in about half the country.
"Bezos wants people to see Prime as the best benefit in retail," Lowry said. "Prime already has 100 million plus subscribers, but there's still a lot of Americans left to capture. Once you're in the Prime family you're much more likely to shop with Amazon for the majority of your needs."