Will Giant Retailers Take A Punch? Bring On The Competition

Walmart and Whole Foods, two of the nation’s most well-known retailers, boldly stepped into the proverbial boxing ring last month, with announcements that take unabashed aim at their competition. Walmart’s news heralded a subscription-shipping program in the same vein as Amazon Prime, while Whole Foods unveiled plans to open a new retail format that at first glance — many details of the business model have yet to be announced — bears a striking resemblance to the Millennial-favorite Trader Joe’s. 

Whether Walmart or Whole Foods can actually land a punch against their competition is yet to be seen, but when heavyweights clash, the matches are sure to be worth watching. The following factors are sure to play a role in either’s success or failure, as Walmart and Whole Foods bring their plans to life:



MATCH 1: Walmart’s subscription program vs. Amazon Prime

Walmart dove head first into becoming one of the only true omnichannel retailers this past fall when they amped up their investment in e-commerce. Setting aside the logistical issues of order fulfillment, processing, and shipping that still need to be solved, Walmart will also need to figure out how to create a seamless offline and online experience. 

One possible solution is for Walmart to overhaul its mobile app to work as the literal bridge between experiences. This would create a rich territory for both organic advertising for brands and a unique, engaging shopping experience. 

Walmart’s success depends on face value (for now)

At $50 annually, Walmart’s subscription service is half the price of Amazon Prime, making it the obvious economical choice. However, when you compare features included in each subscription, Walmart falls short of Amazon. With Prime you get free two-day shipping (Walmart offers three-day), as well as unlimited access to the Prime movie and TV library, music streaming, and Kindle Lending Library (none of which are offered with Walmart’s service). It’s important to keep in mind that Walmart is likely to modify and add services as it begins rolling out its pilot program, but it seems unlikely that it could launch enough additional services to steal the notoriously loyal Prime members. 

Walmart could, however, tout their in-store experience as an advantage over exclusively online Amazon by following a similar showroom strategy to Best Buy

MATCH 2: Whole Foods’ new format vs. Trader Joe’s

Whole Foods, or Whole Paycheck as it’s commonly called, has been faced with a huge perception problem since the organic food movement moved into the mainstream and competitors began to offer products of similar quality at a much lower price. Prior to this shift, Whole Foods owned the category and was thus able to charge a premium for its high-end local and organic products. Today, despite numerous price decreases, the chain has been unable to lose its unflattering moniker and associated reputation. 

As opposed to trying to change perception, Whole Foods has decided to hop on the Trader Joe’s bandwagon by creating a different store concept all together that will appeal to a new, lower-income consumer segment. 

Calculated pandering or responding to real needs?

For Whole Foods, announcing a store that would be tailored to Millennials raised a few questions: why does a single generation need its own grocery store? What about lower income shoppers? By focusing on the exciting, trendy Millennial generation that’s on the minds of marketers everywhere, it appears that Whole Foods doesn’t understand the problem at the core of its identity crisis: that they are a retailer out of touch with the circumstances and needs of everyday American shoppers. Whole Foods has an opportunity to bring about real change by making it’s purpose to “support the health, well-being, and healing of [our customers]” affordable and accessible to people of all ages – not just Millennials. 

For both Walmart and Whole Foods, their success will be determined by how effectively and consistently they’re able to deliver on their respective promises of providing more value to their shoppers. While there are sure to be some knocks along the way, reacting to these in an honest and meaningful way that’s true to their core values and purpose will determine their eventual success.

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