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What: With its purchase of Whole Foods for US $13.7 billion, Amazon strengthens its position in the race for the retail industry, and opens the door to direct contact with the Hispanic community.
Why It Matters: The U.S. supermarket sector is a business that moves about US $800 billion in sales annually, according to Bloomberg data.

Amazon’s acquisition of Whole Foods for $13.7 billion is the largest acquisition to date by the Jeff Bezos-led company, and the most important merger in the retail industry. With this deal, Amazon now has 450 stores in major cities in the United States, Canada, and the United Kingdom. What are the implications for marketing and multicultural/Hispanic marketing in particular?

Lee Vann
Lee Vann, Chief Strategy Officer of Captura Group.

“Consumers are increasingly demanding products and services in near real time or “on-demand,” and a physical presence in major cities gives Amazon an infrastructure to support consumers in near real time. This is especially salient when it comes to the grocery category,” Lee Vann, Chief Strategy Officer of Captura Group, told Portada.

The two companies will operate separately and the supermarket chain will retain its brand. Amazon founder Jeff Bezos points out that Whole Foods is “loved” by its customers for the quality of its products, and will maintain its corporate offices in Austin, Texas, for now.

“The acquisition, giving Amazon the in-store presence previously lacked at scale, represents a level of competition that brick and mortar retailers had previously been able to avoid. While this entrance has an immediate effect on grocery, it puts other industries on notice,” said Sean Cheyney, Vice-President, North American Business Development at Triad Retail Media.

The acquisition gives Amazon the in-store presence it previously lacked. This represents a level of competition that other retailers had previously been able to avoid.

Both Amazon and Whole Foods stand to gain from this transaction, according to the industry expert. The e-commerce giant is in the habit of being an industry disruptor. “Now is the time that grocers and retailers across industries need to be competitive in their markets with their digital advertising and in alignment with their suppliers.”

The announcement undoubtedly rocked the supermarket industry, as the acquisition of Whole Foods changes the rules of food distribution. This was reflected in the stock market, with some companies in the food industry seeing their shares fall immediately. Kroger’s shares fell 15%, while Target lost 11% at the start of the trading session, and Costco 7%.

Now is the time that grocers and retailers across industries need to be competitive in their markets with their digital advertising and in alignment with their suppliers.

Competition Intensifies

AmazonThe deal puts the U.S. market in an interesting situation, just a few months away from the arrival of German supermarkets Lidl, and its rival Aldi, owner of Trader Joe’s supermarkets. With their entry, the German companies will strengthen their presence in a market with high growth potential.

On the other hand, while all this was happening, Walmart also announced on Friday its purchase of online fashion store Bonobos for $310 million. With this move, the retail giant seeks to compete directly with Amazon in the fashion sector.

Walmart also announced on Friday its purchase of online fashion store Bonobos for $310 million.

Walmart has demonstrated an aggressive strategy to gain ground in the e-commerce sector, becoming a very strong competitor. Last year, the company acquired jet.com for $3 billion.

The acquisition appears to have been a smart move, as Walmart sales grew 63% during the first quarter of 2017 compared to the same period last year.

An approach to US Hispanics

Sean Cheyney
Sean Cheyney, Vice-President, North American Business Development at Triad Retail Media.

“This purchase is something that the industry had been waiting for many years to give it seriousness, organize its data, and better align the industry’s digital efforts. With these metrics, retailers are able to give consumers a better experience,” added Cheyney.

Analysts agree that Amazon will put the retail industry under a lot of pressure, as it first did with bookstores and electronics stores.

On the other hand, “remember that Amazon rolled out a Spanish language version of Amazon.com. As they seek to win with the on-demand consumer, they know they must win with US Hispanics, and now they have a front end to service those who speak Spanish and a physical presence in major cities to deliver,” said Vann.

Remember that Amazon rolled out a Spanish-language version of Amazon.com. As they seek to win with the on-demand consumer, they know they must win with US Hispanics, and now they have a front end to service those who speak Spanish and a physical presence in major cities to deliver.

In addition, it has the necessary cash to invest and be aggressive, with the support of its current suppliers and those it keeps adding. Likewise, it will have the strength to continue offering its Amazon Fresh grocery delivery service.

It will also put its Amazon Go model to the test. The company opened its first automated food store in downtown Seattle, where payment is made through an Amazon account and a cell phone.

Whole Foods MarketThe idea has been described as “brilliant” by analysts, who see it as a “natural evolution.”

“Retailers across all industries should be watching closely to see how Amazon uses this acquisition and its effect on Amazon’s market share within the grocery sector. Given Amazon’s history, it will take the model developed for grocery, and then replicate it across other retail verticals. While watching closely, retailers can take steps to mitigate Amazon, blocking and tackling along the way. This includes getting serious about customer experience and advertising models that allow the retailer to earn its fair share of advertising dollars that its suppliers are currently spending to sell products on Amazon,” added Cheyney.

While watching closely, retailers can take steps to mitigate Amazon, blocking and tackling along the way. This includes getting serious about customer experience and advertising models.

Join us at PORTADA Mexico!

A summary for Corporate Marketers, Media Sales Executives and Advertising Agencies to see what clients are moving into the Hispanic market and/or targeting Hispanic consumers right now.

Check out Portada’s Interactive Directory of Corporate Marketers and Agency Executives. 20 NEW LEADS HAVE JUST BEEN UPLOADED. To acquire the database, please call Jennifer Chan at 347-840-1311 or e-mail her at jennifer@portada-online.com SEE A DEMO OF THE DIRECTORY!
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    • Jet.com

yogzqREQ_400x400Maxus Americas has been named the Media Agency of Record for Jet.com, an ecommerce startup that is redefining the online shopping experience. Maxus will specifically focus on the TV portion of Jet’s overall media spend, overseeing the planning, buying and analytics. GroupM’s media agency will lead the extensive new multi-channel media plan valued at US$80 million throughout the United States, effective immediately.Jet has been growing exponentially since its launch in July 2015. Under the leadership of CEO and founder Marc Lore, the website has attracted more than 2.4 million members in less than 6 months. Maxus Americas won the business following a review and will be replacing the incumbent agency Ocean Media. The creative portion of the account, which was not up for review, will continue to be handled by R/GA. The account will be managed out of agency’s New York office.

      • Cinemex

cinemex-Cinemex, one of the largest group of cinemas in Mexico, has confirmed its expansion plan to increase its market share through a US$100 million investment that will allow to open 25 centers, in addition to analyze the opportunities offered by Latin America. In 2016, the firm expects to open 25 new facilities. For that matter, the company expects to invest about US$100 million this year and around US$500 million the next five years, as part of its growth strategy. Cinemex will open cinemas in the United States (the first in Miami) and will open four other resorts in the US territory: one in Florida, two in New Jersey and one in Illinois, hopefully by 2017. The company has been also evaluating the possibility of entering other markets, primarily in Latin America, where they have received several offers.

      • CVS Health

d0_zpVn3_400x400CVS Health has announced strategic partnerships with two national organizations whose mission is to advance the multicultural nursing populations in the United States: the National Black Nurses Association (NBNA) and the National Association of Hispanic Nurses (NAHN). Through these newly formed alliances, CVS Health,  will establish workforce development programs and strategies that facilitate multicultural talent acquisition to further develop the company’s own diverse nursing populations through education, training and colleague engagement. CVS Health supports a broad nursing workforce that includes:

      • Wonderful Pistachios & Laura Posadas

CY7jsQGWcAA3BR-Wonderful Pistachios has partnered with  TV personality, certified master life coach and bicultural motivational speaker Laura Posada. Posada will serve as the brand’s Latina ambassador to promote the health attributes of pistachios and the importance of healthy snacking habits among Hispanics by encouraging healthy living and awareness of the brand and the product’s key nutrition benefits. Posada will kick off Wonderful Pistachios’ 2016 campaign with a variety of consumer and media activities that will allow her to connect with the U.S. Hispanic audience and provide advice on how to eat better and improve overall fitness. This is the first time the brand works with a spokesperson to reach Hispanic sectors.

      • H&R Block

mmWisin, one of Latin-urban music’s hottest talents, is the star of a new campaign that H&R Block is using to kick off this year’s tax refund season with a bang. The spot announces an early-season promotion during which 1,000 people will win US$1,000 a day from now through February 15, the equivalent of US$1 million a day for the first month of the tax refund season.For the new campaign, created by H&R Block’s Miami-based agency of record MARCA, Wisin re-recorded his hit song Piquete. In this special version of the song, now called Billete (money), the Latin music star encourages U.S. Latinos to file their taxes early and visit H&R Block offices for a chance at the daily drawing.

      • Dove Regenerative Nourishment

Dove is unveiling Dove Regenerative Nourishment, the latest addition to the Dove Advanced Hair Series collection, which uses a unique combination of technologies and ingredients to replenish lost nutrients while restoring smoothness and strength. Drawing inspiration from nature, the system is infused with Red Algae extract + Keratin NutriComplex, and repairs the internal structure of damaged hair by directly interacting with the keratin, reconstructing and strengthening hair from within.  Dove Regenerative Nourishment products will be available for purchase in mass, food and drug retailers nationwide beginning January 2016.For more information, customers can visit www.Dove.com, or Facebook, Twitter or Instagram.Dove® Hair is a Unilever’s brand.