This morning we learned that Amazon has bought Whole Foods for $13.7 billion in cash. What’s up? Information on Amazon’s plans for Whole Foods is in short supply at present, except that it’s known that Amazon wants to get into the grocery business, that Amazon was interested in a brick-and-mortar presence, and that Whole Foods was hurting, chiefly because of cheaper competition.
I feel a very strong interest in this, because it happens that Whole Foods and Amazon are the two organizations that get most of the money I spend. Until we learn more, I’m forced to speculate about what’s going to change.
First of all, Whole Foods was starting to show (at least in the Winston-Salem store where I shop) alarming signs of money problems. Staff seemed increasingly spread thin. The coffee bins and bulk bins were sometimes empty and neglected, with no bags. The produce wasn’t as fresh and beautiful as it used to be. Basic perishables such as cream would be out of stock. The decline troubled me so much that I shopped one week at a competitor, Fresh Market, to investigate whether I should switch stores. I decided to stick with Whole Foods and hope for the best.
One of the sad things about Whole Foods is that much of the new competition has been coming from grossly inferior stores — Publix, Aldi, and a new one, Lidl. Aldi, as far as I could tell having only been in one once without buying anything, is what grocery stores would be like in hell. You had to deposit a quarter to get a grocery cart! The produce looked more like compost prewrapped in plastic. How such dreadful stores could give Whole Foods a hard time puzzles me, but apparently that was the case.
So then, Amazon could have seen its grocery future in an Aldi-like store, or even a Publix-like store, stores with a mass-market and warehouse feel to them. Certainly that’s what Amazon Pantry implied. Amazon Pantry sells only mass-market stuff that I would never buy. But instead Amazon chose Whole Foods, with its high-end, high-priced reputation, a chain that everybody knew was starting to get into trouble and that needs some repair to its reputation. Surely this tells us something about Amazon’s intentions for Whole Foods. Until I find out otherwise, I’m going to take the optimistic view: That Amazon will spend heavily to spiff up Whole Foods stores that were starting to show signs of hardship, and that Amazon is aiming at the high end and leaving the low end to a now crowded low-end market. Also, there is bound to be some kind of integration between online grocery shopping and going to the local Whole Foods.
This could be great! For a while, it looked as though bottom-feeder stores like Aldi were going to make life harder for high-end shoppers like me by driving high-end stores like Whole Foods into poverty. Now suddenly the prospects have turned. With Amazon aligned with Whole Foods, we may soon see the bottom-feeder stores starting to look shabby.
Update:
Grocery stocks tank on news that Amazon is buying Whole Foods