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Grocery retailers trying to keep up with Amazon and Whole Foods

Everybody knew that when Amazon acquired Whole Foods last year the grocery game was about to change. The question was, how much and how fast?

Quite a bit and quite quickly it seems.

“Food retailers, manufacturers and other suppliers have begun to make fundamental changes to their selling strategies, driven partly by stronger sales and delivery from Whole Foods stores since the acquisition,” reported the Wall Street Journal.

For example, there was no doubt that grocery retailers had to invest in e-commerce, but Amazon’s presence has sped up the process — in many cases by two or three years, Steve Caine, a Bain & Co. partner who consults with grocers on their online strategies told the Journal.

Take Instacart, for example. Prior to the Amazon-Whole Foods deal the online grocery-delivery service company had about 30 retailers in its stable. Today that number tops 200. Grocery giants such as Kroger, Walmart and Target have significantly upped their investment in e-commerce technology, while at the same time slowing store growth, reported the Journal.

On the manufacturer side, companies have changed their packaging so they play better online than in-store. Distributors have seen change as well. United Natural is Whole Foods main distributor, and the Providence, RI-based company has seen sales surge.

“Amazon’s formula for attracting customers to Whole Foods was simple,” reported the Journal. “After the deal closed, the online retailer slashed prices on avocados, bananas and other items at Whole Foods’ 460 U.S. stores, attracting waves of shoppers. That formula has helped drive year-over-year sales growth of grocery goods and health products sold by the distributor by the greatest levels in seven years, according to financial filings by United Natural.”

Not many have been surprised by how Amazon has altered the grocery landscape, and they are expecting more.

“It’s this anticipation of what may come next that has turned up the heat on everyone,” Caine told the Journal.