As everyone knows by now Amazon has agreed to buy Whole Foods. Depending on what Amazons intentions are, this could lead to an important transformation or a critical disaster for those of us who depend on Whole Foods for our staples.
Just to get it out of the way, I know that most people likely have a basic dislike for Whole Foods. This is especially true if one is on the traditional American diet. I get it, Whole Foods is a niche store, just like Trader’s Joe. If you have a bad first impression, as I did with Joe’s, it doesn’t become your go to shop. In my case, I saw the fruits and vegetables wrapped in plastic in styrofoam trays, and thought ‘who would do that int he 21st century with plastic piling up in the ocean’, the I tried the two buck chuck and wonder who is desperate enough to drink this swill. Saint Genevieve can be had for four bucks, and it is at least two time less disgusting. So everyone has a least favorite
I also understand that Whole Foods is now large national chain, which is why it was difficult to manage costs, which is why it was difficult to increase profits, which is why it was ripe for a buyout. I don’t like chains either. I mostly don’t buy groceries at Walmart, Target, Kroger, or even the Texas chain HEB. There are two small small chains in my town that cater to hispanic people, just tens of store each, and they provide local service to local people. Of course when I started shopping at Whole Foods it was just a small chain, just in a few cities in Texas, with basic food items, none of this 365 crap intended to compete with WalMart.
With that out of the way, with the caveat that most people don’t see a value in Whole Foods, what is the value to a foodie who likes to cook. Well, it is that there are a lot of good products in one place. For instance, it had Quinoa back in the day when most people did not know what this was. It had and has almost any type of rice that one needs to make whatever one needs to make. It has hulled, not the nutrient free pearled, barely. It has local honey. It has all the spices one needs and one does not need to buy a bottle then throw most of it away. It has a bunch of cheeses. It has eggs where the girls are free to roam the pasture, allegedly. It has really expensive vegetables and fruits that are sometimes a value, especially when you want to put on a really well presented shindig. And, unfortunately it has a lot more junk food than it did 30 years ago. If you stay away from the processed food, the prepared food, the meat, it is not too expensive. Many years ago my friends and I were able use our very limited food budget to shop there, but we were not cooked and cokes and ice cream either. Try getting steel cut oatmeal cheaper than whole Foods. It wasn’t until later I could afford Three Twins.
I think there is a good chance that much of this could go away. The pundits are saying that Amazon wants to provide an opportunity for customer to drive the last mile instead of having delivery, but I don’t think that is the case. Amazon on Thursday began giving away a Alexa enabled device bundled with a few months of free Amazon Fresh, it’s food delivery service, which only is available in dozen or so US cities in maybe 10 states. On Friday they announce that they now have 400 outlets in almost every state.
For a while Amazon has been aggressively expanding it’s Amazon Prime delivery service. One problem is that it cannot usually offer the one hour delivery, which is an additional cost. which only has very limited one hour. Instead of have one distribution point in the city, in my case way in the suburbs, it has a centrally located stocking point. The same can be said for normal deliveries, which can go out on Amazons own fleet of vans.
We have sen the economics do not support brick and mortar real estate. Delivering to the last mile is expensive, but also is stocking a bunch of stuff that no one buys. WalMart solving this problem by only carrying stuff that moves, and by have some local control over stock. Trader Joe’s and Aldi’s solves this problem with very limited store branded stock. Whole Food solve this problem by charging exhorbinate prices for some good.
Whole foods already has an option for curb side pickup of groceries. That will certainly remain. Amazon will certainly provide a credit for delivery to a Whole Foods instead of your home, the same way that it provides a discount now if you decline two day prime delivery. Neither of the is going to justify the purchase of Whole Foods.
No, I think they are going to have convert some of the store space to warehouse space, so some stock it going to have to go. It could be the retail stuff, the over priced shoes, cooking utensils. The $10 a pound ‘handmade’ soaps. The counter argument to this is these are cash cows, the impulse buys that drive profits up.
It could be a reduction in space for the bakery and prepared foods. While these take up much of the store, I notice there is much less staff in these areas than they used to be. I don’t think that these areas are as busy as they once were, with many other places serving quick healthy meals, and given that many Whole Foods are basically wine bars where people go to have drinks and snacks during lunch of before going home.
My fear it that will be low profit bulk and staples section. Twenty years ago when Whole Foods was expanding out of Texas, it revamped its stock to higher profit items. Out went some of the grains that did not sell, in came the candy and junk food. Whole Foods always has some forms of candy, often carob coated nuts and berries, but now it had outright traditional candies, not healthy facade.
So, we wil have to see if Whole Foods is going to continue to provide anything that looks like Whole Foods, or if it will just be Amazon pick up points where people can pick up their groceries and electronics, drink some wine, hook up with a willing partner, and go home with a prepared Saag Paneer.