How Amazon’s Purchase of Whole Foods Will Impact Retail

For several years, Amazon has been attempting to get into the food business but with little success. More recently, they have also been exploring storefront retail outlets but with more success (e.g., Amazon Go stores are not ubiquitous, but they have been proven viable for the company). With Amazon’s purchase of Whole Food, however, it now seems increasingly likely that in the near future, Amazon will also come to dominate the food market. What does this mean for the future of retail and for staffing? The acquisition, which was announced last week, likely means the end of grocery retailing as we know it and a major overhaul of retail store staffing.

Amazon’s Retail Vision

PeppersAmazon is not moving into storefronts to replicate what physical stores already look like. In fact, their vision is to transform what storefront retail looks like on every level. In Amazon’s stores, customers scan products and walk out, or if they don’t want to lug heavy bags around, they scan and have the goods delivered. One may wonder why bother with stores at all if there are no cashiers and one can simply have everything delivered. The answer is simple: People like to buy some things online (e.g., small electronics, books and office supplies) but people don’t like to buy other things online (e.g., large appliances but also fresh produce, fish, meat and cheese). To dominate the food industry, then, Amazon needed to come up with another solution, and this is where the Whole Foods acquisition will likely prove to be a savvy investment.

With the acquisition of Whole Foods, Amazon has bought a trusted, contemporary retailer that is known for trend setting (e.g., making organic food mainstream). But don’t expect your whole foods to look like it does now in another two to three years. Cashiers will soon be reduced and scan-and-walk-out-the-door will soon be the norm at your local Whole Foods. If you currently rely on a third party, such as Instacart, to have your Whole Foods shopping carried out and delivered, you’ll also soon be able to log off Instacart with its $7 per deliver fee. With Amazon’s take over of Whole Foods, one will soon be able to take advantage of Amazon Prime and Amazon Now prices and services while shopping at Whole Foods.

The Impact on Staffing

At Whole Foods, job cuts in terms of front line staff seem inevitable. While no one knows how many of Whole Foods 90,000 employees will get the axe, both Whole Foods employers and industry insiders are predicting massive cuts as sensors and scanners replace cashiers.  Money saved on staffing, however, will be passed along to the consumer. Amazon has already said it will reduce the price on Whole Foods’ popular brand of products, Whole Foods 360.  The bigger impact, however, may take place over the coming decade. If Amazon’s plan is successful, it will provide a model for the future of storefront retail. To compete, it seems likely that other retailers, and not only in the grocery industry, will also need to start emulating Amazon’s technology driven approach to retail.

The Impact on the Food Supply Chain

Vegetables While less obvious that the immediate staffing issues, there is no question that Amazon’s foray into food retailing will also impact the supply chain. Fresh produce, fish and meet are part of a complex supply chain. Unlike other goods, these goods must typically arrive just-in-time and miscalculating how many radishes or Cornish hens to have delivered to a specific store on a specific day can and does have major consequences. With Amazon’s arrival, there is no question that we will also begin to see a major overhaul of supply chain management in the retail industry. After all, Amazon is ultimately driven by data.

So, what is the future of Talent Management in the grocery industry? At the very least, Amazon’s purchase of Whole Foods suggests that in another decade, the grocery industry will employ far fewer people in lower paying frontline positions (e.g., cashiers), more people in warehouses, and more people in higher-paying engineering positions. Given the gendered nature of grocery retail, warehouse, and engineering jobs, it also seems likely that fewer women will be employed in the grocery industry and eventually in the retail industry at large, unless both warehouse and engineering positions start to correct their entrenched gender divisions.

June 23, 2017   Updated :June 24, 2017      

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