Jeff Bezos has hit the trifecta of megatrends now that Amazon has added Whole Foods to his portfolio. But, how will this 21st century conglomerate operate to turn the trifecta win into new revenue and create brand positioning?
The answer will depend on how Amazon leverages each of these megatrends:
Megatrend Win #1 is the digital transformation of our world, which Amazon was already leading. We’ve been told time and again how digitization is affecting all aspects of life, from retail purchasing to healthcare management. As Amazon knows, doing this well also creates a database that is itself huge, valuable, and positioned for long-term commercial success.
Megatrend Win #2 is the widespread recognition of the importance of healthy living and lifelong wellness, which Amazon now has in its grasp with the Whole Foods acquisition. Businesses from pharma to food have realized that healthy, active lifestyles are the key to prevention and wellness, and they are seeking opportunities to adapt and capitalize on it. For example, Nestlé recently announced that it will get rid of its candy business as it transforms from a chocolate, coffee and candy company into a health sciences behemoth. Amazon’s pivot toward the health and wellness space is one more signal that the business world is pursuing the commercial and image benefits of this area.
Megatrend Win #3 is the biggest of all – the aging of society. Mr. Bezos now has this in his sights as a natural consequence of the first two megatrends. He may not even know it yet, but this is a place where real value can be created, but which others often don’t quite get. With a billion of us over 55 and doubling over the next 2-3 decades, aging will be the most important megatrend to drive huge revenue growth in the years to come. This is driven by fundamental demographic forces: long lives, even to a hundred years, are becoming fully built into modern society across the planet, as plunging birth rates lead to more old than young everywhere. In this new older world, who doesn’t want to age well? This will surely be connected to how we eat and our ability to easily get the healthy foods that are Whole Foods’ specialty – avocados, berries and fat-free stuff.
Can Amazon connect its strategic dots to capitalize on these three megatrends of our time, even as it helps shape and grow the massive Silver Economy before us? Is the aging trend itself – one Mr. Bezos has neither purchased, nor to date targeted, actually the principal driver of the success? Three indicators for investors and the rest of us fascinated with this 21st century version of a corporate conglomerate:
First, will Mr. Bezos figure out how to connect healthy eating to the holy grail of functional ability as we age? This “functional ability thing” is moving to the center of health policy, as international organizations and governments look for ways to help individuals across the world stay healthy and maintain their capabilities as they age. It’s good politics and essential for fiscal sustainability in places where there are more old than young. There are, of course, the medicines, surgery and other direct healthcare solutions for illness and disease. But, as we can now expect to live long lives, it will be the conditions of aging – skin, oral, vision, and muscle/bone health – that will make the difference as to whether we will welcome or fear the miracle of longevity. Amazon can now not only redefine retail, it can be a big player around the health policy tables in DC, Tokyo, Beijing, Brussels and Geneva.
Second, how will Amazon connect the digital technology revolution to the 55+ segment, which holds 70% of disposable income in the US, and similar shares in other developed countries from UK and Germany to Japan and rich Asia? It will be interesting to watch how the marketplace develops to enhance this segment’s access to all products and services through digital platforms. There is, of course, one set of opportunities in the 55-70 segment already here; another for those making the decisions for their aging parents and friends; and still another as we all become digital natives over the next two decades.
And third, surely Whole Foods is a first and a test case for Mr. Bezos to distribute products through multiple channels, including to the exploding demographic of older adults who, as we recently heard from the Aegon research on retirement want to “age in place.” How will Amazon’s distribution system work directly to consumers, as well as the B2B of home care, nursing, and city governments at the center of the age-friendly movement?
Smart and fascinating move, Mr. Bezos. Now we will be watching to see how you and your strategy team will keep wowing us. Not only the Whole Foods deal, but how you run this fascinating 21st century style conglomerate.