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Look out Canada, Amazon is coming!

With only 13 stores, Whole Foods Market’s network in Canada is relatively small. However, with most of the stores in either Toronto or Vancouver, situated in some of the most affluent catchment areas, they are a prized asset.

Across the border we see many opportunities for both companies from the deal. Amazon will be able to use the stores for last mile delivery efficiencies and gain a much stronger presence in the private brand space. Whole Foods Market can optimize Amazon’s analytical capabilities to improve product assortment and use its technology to develop a frictionless customer experience.

But, what does the deal mean for Canada and the broader retail sector? If there’s one area to pinpoint, it’s grocery e-commerce. Amazon has yet to bring its AmazonFresh model to Canada, having focused its efforts on the U.S., U.K. and Germany. The Whole Foods Market deal provides it with an opportunity to develop its model and build a presence in a channel that remains relatively underdeveloped. This is particularly the case for home delivery, with most of the Canadian grocers prioritizing the store pickup model.

I can easily see Amazon using Whole Foods Market’s stores as pickup locations for an AmazonFresh type service, servicing some of the most affluent catchments in two of Canada’s major cities.  With stores in Ottawa and Victoria and previously planned sites in Calgary and Edmonton, the potential exists for a coast-to-coast service.

So, what can we expect over the next few months? Loblaw, Sobeys, Metro and Walmart will be alert to the new competitive threat. Expect to see their e-commerce plans accelerated, and focus on service enhancements to lock in loyal customers. They will also likely expand their ranges of natural and organic products.

And it’s not only the grocery retailers that will be in Amazon’s sights. Whole Foods Market has an outstanding food-to-go offer, and the opportunity to take this online and combine with a Prime Now delivery service is compelling. The rise of meal kits and food delivery services indicate a strong demand for this which, when combined with packaged groceries and a differentiated fresh food offer, could be a powerful proposition.

The U.S. will be the priority for Amazon initially, as there’s so much opportunity for both companies to learn from each other. However, one of the world’s most innovative and forward-looking retailers is unlikely to pass up on the opportunity to cause some disruption in the Canadian market.

Stewart Samuel is program director at IGD Canada. Contact Stewart at stewart.samuel@igd.com for further insight into Canada’s grocery market, leading retailer’ strategies and channel developments

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