Why the Game Just Changed for Healthy Foods

The Whole Foods-Amazon merger was the shot heard around the retail world. It’s hard to find a food industry expert who hasn’t opined on this deal in a blog post, article, or presentation.

Is this a case of too much analysis? On the contrary, I’d argue there’s even room for more.
That’s because this combination, only a few months old, represents a wakeup call on so many levels.

Let’s look in particular at the stunning impact on healthy foods and private brand. Amazon is committed to expanding the reach of healthy foods with better prices.

This is already playing out with more of a value-pricing approach at Whole Foods. I saw it myself as I walked through Whole Foods’ stores not long ago. One display at a fish counter relayed that “Responsibly Farmed” Tilapia Fillets from Ecuador, previously priced at $10.99 a pound, were now reduced to $7.99 a pound. On the signage, the Whole Foods logo was placed next to Amazon’s logo, with a plus sign in between. The clear message was that a new day had dawned, with the new affiliation delivering lower prices from a retailer long dubbed “Whole Paycheck” by critics of its sticker-shock pricing.

A similar marketing push is playing out on Amazon’s website, where Whole Foods products are now displayed. The Whole Foods logo appears alongside the wording: The start of something good. Whole Foods Market products now available on AmazonFresh.

Despite Amazon’s value push, the U.S. health and wellness market is being transformed by more than just price. A widening definition of health by consumers is also changing the game. Shoppers have expanded the topic to include concepts such as clean label, which for many retailers means the removal of artificial ingredients and preservatives. S4RB presented a white paper on this trend at the recent Food Marketing Institute Private Brands Summit in Washington D.C., offering key steps for brand owners to embrace in pursuing clean label strategies.

Retailers have developed impressive strategies in expanding healthy foods assortments over the past few years. But they can’t rest on their laurels. Consumers keep moving the bar and have more choices than ever.

All this represents the next phase in the mainstreaming of healthy foods. Customers demand not just better prices, but also wider assortments and more convenient access. This goes for both physical and virtual shopping experiences.

Which retailers are impacted? Just about all of them. Consider that even Trader Joe’s, the highly successful private brand operator, was cited recently by research firm Magid as being the retailer most at risk of losing shoppers to the new Amazon-Whole Foods organization, according to a recent Food Navigator article. This is because Trader Joe’s shoppers are known to be heavy cross-shoppers at both Whole Foods and Amazon, the piece reported.

Retailers facing a changing healthy foods landscape need to find the best supply arrangements and manage supply chain costs and relationships better than ever. Private brand needs to do this across scores of categories. All this takes a lot of coordination with suppliers, and requires consumer insights that are on target for each retailer. Those insights will inform smart decisions about private brand strategies, such as which tiers or categories need to be prioritized.

The only problem is time is short. Disruption in the space is speeding up.

This necessitates not only smart moves, but also quick ones.

Tags: Food trends

David Orgel

Share this blog:

Leave a reply

Recent posts