Against all expectations, Amazon has snapped up Whole Foods in the United States. Here are five things we can take away from Amazon's acquisition of the organic supermarket chain.

EUR 12 billion

That's how much the Amazon Group spent to purchase the 460 Whole Foods stores last June. A highly symbolic move – and a milestone. For the group founded by Jeff Bezos, this is its most significant purchase to date. Amazon already plays a prominent role in sectors such as bookselling, electronics and clothing. Up to now, none of its forays into the food sector have achieved the desired results. Amazon's external growth strategy has to accelerate the company's diversification.

Whole Foods, a high-end niche

The concept is a niche grocery store that specialises in organic produce (food, beauty products). The stores are primarily located in cities. Moreover, the success of Whole Foods is, by and large, limited to those states that are receptive to the idea of organic and health foods: places such as California, New York, Washington and Oregon, as well as cities like London. Although Whole Foods has grown rapidly, recording a sales growth of over 200% in 10 years, growth has continued to slow since 2015 as market competition increases. Despite yielding to Amazon's advances, John Mackey, founder of the company, will continue as CEO.

The industry is left reeling by the announcement

On 16 June, the day of the acquisition, share prices for the big conventional retail chains plummeted in New York: Target fell by 5%, with Walmart following suit; CostCo dropped by a huge 7%. It just goes to show that this upheaval is unprecedented in the history of supermarket distribution in the US, where, interestingly, the big players listed above have set the reverse process in motion (moving from brick-and-mortar stores to digital), primarily to combat the drop in traffic to their retail outlets.

Synergies between digital and retail outlets

The group is looking to learn the ropes when it comes to managing brick-and-mortar stores. At the end of 2016, Amazon launched a new concept from its Seattle headquarters: a supermarket that uses artificial intelligence technology instead of checkouts. Amazon's move into the food industry will involve diversifying into an area with new and more complex logistics: stocking and delivering these goods will involve time constraints. The Whole Foods Group is the perfect size to make this foray successful.

European chains may respond to the move

For Oddo Securities, Alexandre Bompard's move to the helm of Carrefour is a sign, pointing to the possibility of a merger between the distributor and Fnac-Darty, now a joint venture.

"These ties would put Carrefour in pole position online, far ahead of Amazon in terms of unique visitors. It would also address the problem of the reallocation of non-food spaces in hypermarkets, which remains an Achilles heel for the retail chain."
Laurence Hoffman, Oddo.

Every entrepreneur will tell you that financial markets are unpredictable, entailing inherent risks. We provide tailored solutions to protect your business as you navigate these volatile markets.

Whether you’re a small or large business, operating domestically or internationally, one thing is certain: if you enter a market and do your utmost to grow your business, sooner or later there inevitably will come a time when you expose yourself to risks. Frédéric Raxhon, Head of FI Midcap Sales, BNP Paribas Fortis Transaction Banking, is our go-to expert. Here, he explains how BNP Paribas Fortis helps customers manage this uncertainty.

Raxhon knows how market volatility can impact the daily operations of small, medium and large enterprises. Thanks to his experience of working as a banker in corporate finance, shares and derivatives, and advising holding and listed companies, he understands how the market works like no other.

Raxhon: "We are keenly aware that price uncertainty, in the form of volatility on the financial markets, can have a serious impact on the operations and profitability of businesses. That’s why we constantly monitor the markets and their volatility: if prices fluctuate sharply, our customers run the risk of buying high and selling low. The past few years are a good example of what can happen, with a sudden rise in interest rates, an energy crisis with very volatile prices, and a sharp rise in inflation. We will continue to see volatility in these markets, due to geopolitical tensions and ongoing wars. However, elections can also cause volatility, as they often cause a change in economic policy. President-elect Donald Trump has already said that he will hike tariffs on goods coming from outside the U.S., which will have an impact on global growth and inflation. The transition to a more sustainable society because of the energy transition, however positive this may be, is also a source of uncertainty. Companies will be required to make significant investments, and it is not yet clear which technologies will prevail.

All of these factors show that companies need guidance in the form of a tailor-made solution to ensure that volatile markets minimise the impact on their operations so that they can focus on their core business."

Solution-oriented

The solution to this volatility comes from a partner who is a market leader when it comes to safeguarding national and international business.

Raxhon: "At BNP Paribas Fortis, this often means managing the risks of companies that have a number of straightforward wishes: they want to conduct business on a daily basis without unnecessary complications; buy at a stable price where possible; pay wages in a stable environment; sell to customers with a profitable, stable margin, and so on. If they experience market uncertainty in their business operations, we are there to advise them and suggest solutions in different scenarios. This can range from companies that want stability when buying or selling goods in another currency, to controlling fluctuating interest rates on current or future loans, or even creating a stable financial environment in which they can steadily pay their wages. We also hedge raw materials: companies that require large quantities of energy, metal, or wheat, for example – just a few of the commodities that are subject to price fluctuations –  can rely on our expertise to turn their uncertainty into certainty. When companies are calculating their budgets for the coming years at the end of the year, assumptions about budgets and costs are a factor that future markets do not take into account. This, in turn, could lead to inconsistencies in business operations during the next financial year. We regularly suggest solutions for this, which inject trust into the entire process. We help entrepreneurs make their business more resilient to market fluctuations. Because at BNP Paribas Fortis, we are always focused on finding solutions, in any given scenario."

International intelligence

Belgian companies are increasingly expanding their horizons, which is why an international perspective is so crucial.

Raxhon: "Everything is intricately connected in the economic space. The energy crisis, for example, was not a national crisis. In Belgium, electricity prices were directly impacted by the drop in nuclear power production in France in 2022. The American elections have a direct impact on international business, with anxiety gripping investors and the markets. And I can give you many more examples.

Moreover, we expect this interdependence and volatility to continue for quite some time: there are a large number of economic and global trends that are feeding this uncertainty. And that is why it is so important that we keep up with developments in this uncertain global environment. At BNP Paribas Fortis, we rely on a global network of experts who are always on the lookout for the latest updates. Whatever happens and wherever it happens, there are always people from our bank on the ground who monitor the situation and provide us with real-time advice on how best to inform our customers. This network has proven its worth time and again, both for us and our customers."

To prepare your international adventure properly, ask yourself the right questions and talk to people who have done it all before: partners, customers, fellow exporters and experts.

BNP Paribas Fortis listens to the questions asked by international entrepreneurs and offers reliable advice. "A lot of exporting companies ask for our help when it's too late", Frank Haak, Head of Sales Global Trade Solutions, says.

Entrepreneurs with little export experience are often unaware of the bigger financial picture. So what do they need to take into account when they set up a budget for their export plans?

Frank Haak: "Budgeting and pricing are affected by a lot of crucial factors: working capital, currency exchange risks and currency interest, prefinancing, profit margins, insurance, import duties and other local taxes, competitor pricing and so on. We always advise customers or prospects to start from a worst-case scenario. Quite a few companies are insufficiently prepared for their first international adventure: they see an opportunity and they grab it, but quite often disappointment and a financial hangover are not far away.

Our experts have years of export experience and the BNP Paribas Group has teams around the world. This means that we can give both general and country-specific tips. Let's say a machine builder wants to design and manufacture a custom-made machine. We recommend including the machine's reuse value in the budget: can this machine still be sold if the foreign customer suddenly no longer wishes to purchase it or if export to that country becomes impossible due to a trade embargo or emergency situation?"

What type of companies can contact BNP Paribas Fortis for advice?

Frank Haak: "All types! Entrepreneurs are often hesitant to ask for advice. Sometimes they are afraid that it will cost them money. However, the right advice can save them a lot of money in the long run. For example, we recommend a letter of credit or documentary credit to anyone exporting goods to a foreign buyer for the first time. This product is combined with a confirmation by BNP Paribas Fortis to offer the exporter the certainty that it will receive payment when it presents the right documents and to assure the buyer that its goods or services will be delivered correctly."

The consequences of not seeking advice: what can an exporter do in case of non-payment without documentary credit?

Frank Haak: "If you are not receiving payment for your invoices, the counterparty's bank can be contacted in the hope that it advances the payment on the customer's behalf. However, we shouldn't be too optimistic in that respect: the chances of resolving the issue without financial losses are very slim. Once you have left your goods with customs, you usually lose all control over them. Hence the importance of good preparation: listen to and follow the advice of your bank and organisations such as Flanders Investment and Trade (FIT). It will protect you against a whole host of export risks."

BNP Paribas Fortis

Source: Wereldwijs Magazine

Coordinating a company's social media strategy is a task in itself. Who will you use to handle this? And what about involved customers who suddenly get too involved?

Because of social media, the role of a traditional marketing manager is evolving more and more towards being a conversation manager: someone who facilitates consumer communication. This includes communication between customers themselves and communication between the customers and the company.

Some key tasks in the conversation manager's job description are:

• Uniting and activating ‘branded fans’, as they will recommend the brand to friends and family.
• Listening to what people are saying about your company and seeking their active contribution to your products and strategy.
• Creating content worth distributing in order to encourage discussions.
• Managing these discussions.
• Ensuring your work is very customer-oriented and customer-friendly through customer care, i.e.by responding faster and providing more than what the customer is expecting.

Some companies are big enough to hire a full-time conversation manager. In other cases another employee will take on this role part-time. A third possibility is using a specialised company.
Caroline Hombroukx, conversation manager at content marketing company Head Office:

“No matter which option you go for, communication in social media must come across as personal. There is definitely a reason why large companies such as Telenet and Belgacom have created a fictitious person to deal with their customers; Charlotte and Eva respectively. The conversation manager also has to know the company and its social media strategy very well. It may therefore be an advantage if someone in the company itself takes on that role. That person is right at the source and so can distribute information, take a quick picture and post it online, etc.

This task is not for everyone. A conversation manager must have experience with social media, have fluent communication and writing style and must be empathetic, positive and solution-oriented in his or her dealings with customers. Prior training is not a luxury, because the employee must be very aware of the company's content strategy. The audience is varied and unpredictable. You have to decide time and time again whether certain content is or is not suitable for your target group. It is also not a nine-to-five job: the online world keeps on turning even at night or at the weekend."

The advantage of hiring a conversation manager from an external company is that in principle the expertise is present. In that case the challenge is to know the company to such an extent that the customer has the impression that he or she is talking to a real employee.

Getting angry is out of the question

Traditional marketing and advertising are a one-way street. If they do not work, they are a waste of money. However, they are not likely to result in angry comments. A company venturing out on Facebook, Twitter or other social media, can be sure to receive comments and reactions. Including negative ones. Caroline Hombroukx:

“On social media the consumer is suddenly right next to you banging the table. It is important to respond well to that. Getting angry yourself is out of the question. You need to respond by showing that you understand and you are taking the question or complaint seriously. Everyone following the discussion must see that the company is providing a quick answer and is trying to find a solution. If a mistake has been made, you can acknowledge this openly and honestly. You can also show the problem as something positive: as an opportunity to improve your brand, product or service. Of course you must find a suitable solution in the end. If the person sharing the complaint becomes too negative, you have to try and divert him or her to a private channel: a private message on Facebook, a direct message on Twitter, an e-mail or a phone call."

An enthusiastic, understanding response also works well if the consumer is sharing something positive about your brand, company or service. Thanking the consumer strengthens the bond between the company and the customer. Caroline Hombroukx:

"The dialogue with the target group is an opportunity to improve your product or operations through constructive criticism. Make customers feel involved. It creates a strong relationship. If you are publishing a magazine or starting a poster campaign for instance, you can let customers choose the best layout or title from three options posted on Facebook, for example. Everything that engages customers can only strengthen their commitment."

The huge popularity of social media brings new opportunities, but has resulted in some new stumbling blocks as well. What are the most recent trends? And how should you respond to them?

Social media such as Facebook, YouTube, Twitter, Instagram, etc. seem cutting edge, but the principle is as old as the hills: word of mouth, sometimes abbreviated as WOM in marketing. Even in the heyday of the mass media, positive recommendations from neighbours, family and friends remained important to a company's success. Newspapers, magazines and television advertising were the first channel introducing a new product to consumers, but word-of-mouth turned out to play a decisive role in what matters most: consumer behaviour. Consumers shared experiences and thereby affected the behaviour of their fellow consumers. Today, more than ever, they do so through social media.

Consumers persuading consumers

Social media are the contemporary, more sophisticated and super-fast successor of old-fashioned word-of-mouth advertising. They are a catalyst. Social networks allow people to exchange views, share experiences, express their dissatisfaction, etc. more quickly than ever.

In addition, more and more consumers are opting for a "social search" over search engines such as Google to find information. They consciously do not search the entire internet, but approach their friends on Facebook or contacts on LinkedIn or Twitter. It speeds up the search and makes the result more reliable. The idea is that if X thinks it is good/nice/beautiful, we will probably think it is good/nice/beautiful too. There is also the option to ask questions and really discuss the product or service you need information about.

Consumers talk about all sorts of products (offline and online), from new detergents to new car models. And it is not just young people who are sharing their experiences about products and brands. Young and old, male or female: everyone does it. All these recommendations between consumers are worth gold.

We can illustrate this with an example: computer manufacturer Dell assumes that 25% of its customers choose their brand after it has been recommended by another user. The average purchase value per customer is about 210 dollars. Based on this amount, the value of every recommendation is estimated at 42 dollars. The more consumers Dell can convince to buy its products, the more money it makes.

However, the reverse is equally true: bad word-of-mouth advertising can have devastating effects. Particularly in this age of social media, a bad reputation does not take long to spread.

Social media in 2014

Perhaps Facebook will no longer exist in ten years' time, but it will most certainly have been replaced by something else. Social media are here to stay. It is therefore important for companies to build a good social media strategy. They can start by thinking about which channel they want to use for which content and objective. What do you need to take into account?

• Content (the message to the consumer) is still the key part, but the importance of segmentation is increasing. The audience is varied, so not all content and every channel is suitable for everyone. As a company, it is best to divide your target audience into sub-target groups. You can then choose specific content and a channel per sub-target group.
• Create real-time content: define a number of key moments in the year in advance and use these wisely. The World Cup, back to school, the summer holidays, etc. are all events that happen regularly and companies can respond to in a clever way. The trick is to find a good link between the key moment and your product. Be creative in this respect. If a school bag brand presents its content at the end of August, it will have to use an original approach to avoid coming across as predictable. 
• Social media are predominantly a mobile story: most consumers are switching to smartphones and tablets. It is no coincidence that the four best-known social networks are also in the list of most popular mobile apps: Facebook, YouTube, Instagram and Twitter. In any case, your content (both on the website and on social media) will have to be mobile-friendly. 
• The importance of customer care is only increasing. Consumers will now use social media more than ever to find information, ask questions and make comments.