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Amazon Swallows Retail Foods Whole: 13.7 Billion Reasons why the Future of Grocery is Digital

Although it may take some time to become obvious, on Friday, June 16, 2017 the future of the supermarket business changed forever. Why? That was the day digital retailer and e-commerce pioneer Amazon agreed to buy Whole Foods, the now ubiquitous upscale grocery chain, for a stunning $13.7 billion.

That number makes sense when you realize the grocery business in the U.S. alone accounts for $700 to $800 billion in annual sales. The deal signifies that Amazon sees massive untapped potential to bring digital technologies to bear for uncovering new growth opportunities through omnichannel, online-to-offline customer experiences. Whole Foods, with its loyal and affluent base of organic-loving shoppers, looks to be a perfect match for effectively recruiting and cross-selling to members Amazon’s premium Prime service — 62 percent of whom are already Whole Food customers, according to a recent Morgan Stanley survey.

Amazon is certain to apply their highly effective data-mining practices in an attempt to reinvent both the in-store and digital shopping experience. A recent Wall Street Journal article highlighted Amazon’s intention to use the data it will acquire along with the retail stores to learn more about how consumers shop, to optimize supply and demand on a per-store basis and build highly competitive private labels.

By inking this historic deal, Amazon brings more than 400 brick-and-mortar retail locations to its massive warehousing infrastructure, adding a vital component missing from their struggling Amazon Fresh grocery delivery program. Meanwhile, Whole Foods has already rolled out same-day delivery in the past year via online delivery company Instacart. However, experts say that , eventually, Amazon’s penchant for automation is likely to tap Whole Foods’ existing infrastructure to further revolutionize the grocery business through the use of drones to deliver perishable goods — many times cheaper and more efficient than Instacart’s human delivery workforce.

The deal is obviously a boon for Amazon, who gains a real-world foothold in an industry primed for explosive growth. It also looks to be good news for Whole Foods, whose flagging sales and stock valuation in recent months prompted a major boardroom shakeup that saw a new CFO named, as well as five new directors.

At Gigya, we’re seeing this trend develop quickly as well. We’ve recently kicked off major implementations of our Customer Identity Management platform with two large U.S. grocery enterprises, both looking to expand their digital footprint beyond email coupons and discount-driven loyalty programs by incorporating customer identity data into the heart of their strategies. It’s not only online grocery sales — an industry expected to grow to $100 billion by 2025 — that can benefit from connecting online and offline channels. There are also many emerging digital technologies that marry traditional in-store merchandising and point-of-sale systems with digital channels such as beacon technology.

To illustrate, Gigya recently partnered with European location services provider BeaconInside to optimize the performance of real-world, cross-channel strategies that tie customer identity data to proximity information collected by hardware connected to BeaconInside’s platform. This allows retailers to leverage shoppers’ location data to offer in-store experiences personalized to individual customers, effectively enabling the kind of real-time, one-to-one marketing previously only available to pure play digital marketers.

For example, while shopping at a store at which they are a loyalty program member, a customer might receive a notification for a coupon — applicable at checkout — for their preferred brand of pasta when they are walking down the aisle where those particular items are stocked.

The bottom line? Whole Foods’ acquisition offers further evidence that we’re moving toward a future of hybrid models for customer engagement, where the lines between online and real-world experiences are blurred to the point of being non-existent. Gigya is at the forefront of ensuring that this sea change in business strategy uncovers new growth potential for businesses while ensuring privacy and security for consumers.

To learn more about our partnership with BeaconInside, download our data sheet now.

By David Kerin

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