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Amazon Plans Cuts to Shed Whole Foods' Pricey Image (bloomberg.com)
When Amazon completes its acquisition of Whole Foods Market, Chief Executive Officer Jeff Bezos will try to keep the grocer's reputation for premium fresh foods while cutting prices to shed its "Whole Paycheck" image. From a report: Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with Wal-Mart Stores and other big-box retailers, according to a person with knowledge of the company's grocery plans. That included potentially using technology to eliminate cashiers. Amazon, known for its competitive prices, is trying to attract more low- and middle-income shoppers with its grocery push. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot program to deliver groceries to food-stamp recipients.
I would venture that a big percentage of WF clientele shop there *because* of its high-price reputation. There are studies showing that people feel like they're getting a better quality product when they pay more for something, and that is almost certainly a big part of why people shop at WF. I suspect that trying to compete with Walmart is going to destroy the chain.
"smug" people really arent any better than "trash"
just because you have money doesnt make you decent (as your post proves)
have you seen my sig? there are many others like it but none that are the same
just like on amazon.com, amazon should now allow local sellers to come and sell at Whole Foods stores! this may lead to competitive pricing and benefit whole food's reputation & business, farmers and consumers alike.
There's unfortunately little you can do. No matter where you go, the trash is shopping there.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
They want to turn Whole Foods into Wegmans?
I'm... actually okay with that.
Carry on.
I vote for BJs. Always
Time for bed, said Zebedee - boing
I expect the first thing Amazon will change is the back-end distribution system. This is something Amazon knows better than pretty much anyone else, especially for non-perishables, which is probably more than half the store.
I use the phrase "people with more dollars than sense".
When you sympathize with stupidity, you start thinking like an idiot.
No. When I go to a physical establishment, I expect that experience to include one interaction with an employee. Self-checkout is the wrong solution to a problem retailers created: not having enough checkouts open. If you want me to do use self-checkout, thereby doing an employee's job, I want an employee discount. Stop pushing this on customers as if it's some miraculous reverse-ATM.
The article is click bait. As stated in the article, Amazon has not confirmed ANY of the assertions made in the article.
You would hate me when I go to Whole Foods.
I do metal working on the weekends and there is a WF that is about 15 minutes away from me. I've gone in there with steel dust and Mil-Spec on me and picked up a sandwich or a tub of soup. I go and get it there because there sandwiches are really good and the same price as one from Subway.
Also not everyone who shops at Wal-Mart is trash. There are people who are barley getting by and shop at Wal-Mart because they cannot afford to drop their entire paycheck on groceries.
Why am I not surprised the first action upon acquiring a new company is to fire everybody who might know how to run it?
Whole Foods has been in considerable trouble recently so it's pretty clear the folks in charge of Whole foods did not know how to run it. The company found an untapped niche where they were a first mover. The competition has significantly caught up and so it's harder to get away with charging for $6 "asparagus water".
And yes there will be headcount cuts, at least at first. Almost any time two companies merge there are some redundant positions. Furthermore Whole Foods has a cost structure that is not working in the face of increased competition. Part of this means they probably have more people employed than they can really justify. They can change or they can die. There is no option three.
Yeh, this is really sad - WholeFoods for all that it is pricy as hell also sells a bunch of really good quality things that you can't easily get elsewhere. Turning it into yet another Safeway is a real shame.
You do realize Whole Foods started in Texas
Austin Texas. A small bubble of something close to sanity surrounded by the rest of the lunacy that is Texas. Austin isn't much like the rest of the state. They call it weird but it's only really weird if you compare it to the rest of Texas. For people like me who visit Austin regularly but don't live in Texas, it isn't weird at all.
You could be right, but maybe Amazon is playing the long game, hoping to kill brick-and-mortar by the time its retail division needs to start showing profits (and raising prices).
Yeh, this is really sad - WholeFoods for all that it is pricy as hell also sells a bunch of really good quality things that you can't easily get elsewhere. Turning it into yet another Safeway is a real shame.
I agree, but Amazon is a logistics company masquerading as a retail operations; similar to Walmart in terms of focus although not quite as cutthroat from what I've seen. If Amazon can maintain quality while reducing supply chain costs and expanding the customer base to get greater economies of scale tehy could turn Whole Foods into a serious competitor.
I'm a consultant - I convert gibberish into cash-flow.
Its still funny that that myth persists, the whole no pesticides in organic food. Its just flat out wrong. All farmers use pesticides, organic or not
It does seem a bit odd.
You buy a store with a strong established brand image as a premium store and plan to totally reinvent the brand as a bargain low cost store.
They're losing a large chunk of the value of their acquisition. If they want a low-cost brand they might have been better served purchasing a low-cost chain that already had that brand established.
They're going to piss off their existing clientele and probably be shunned by their intended market because they have the exact opposite brand image currently.
I always bypass Whole Foods because they are expensive. That's what their brand means to me. That's where rich people shop. Amazon may plan to cheapen them, and may succeed, but I won't know because I'll be busy going to my average-person grocery store and avoiding Whole Foods.
"That's the way to do it" - Punch
Yeh, this is really sad - WholeFoods for all that it is pricy as hell also sells a bunch of really good quality things that you can't easily get elsewhere.
That's just not true anymore. I have a half dozen grocery stores within 30 miles of my house that are every bit as good (sometimes better) than Whole Foods and serve price points similar to Whole Foods. And frankly there is rarely anything I would ever buy that I can only get at Whole Foods. Decent quality organic produce and meats? Available at several premium grocery stores near me and sometimes even at my local Kroger. Sustainable fish? I've got a fish monger that is WAY better than Whole Foods plus the same premium grocery stores. Prepared foods? Same deal. Deli? I've got one of the best in the country near me which Whole Foods can't even touch. Weird grains? Got 'em. Pricey lotions? Countless options. Bogus homeopathic "remedies"? Widely available from a scam artist near you.
Whole Foods does sell good stuff for the most part but they are hardly the only game in to in the places where their stores are located most of the time. Seriously, what do you think you can get at Whole Foods that isn't available elsewhere?
Turning it into yet another Safeway is a real shame.
Why do you assume it will become a Safeway? Amazon could do a lot to cut costs and prices without turning it into a crappy shopping experience.
WalMart tends to buy at the low end of the quality spectrum, mainly to keep prices down; at least that was the case a few years back when I talked to one of their suppliers who sold to most other grocery chains as well. There is nothing wrong with their food, just a lot of it is a cut below a major grocery chain's quality; that lets them keep prices low. The only exception I've seen is the vegetables which tend to be perfectly fine; the meats and fish OTOH are often barely edible in comparison.
I don't disagree but remember that Walmart doesn't have to capture all of Whole Foods customers to drive them out of business. They just need to get enough to push them into unprofitability like they've done with so many other retailers. The problem Whole Foods is facing is simply increased competition and they don't have the cost structure right now to deal with the threat adequately. Most people simply aren't that loyal to Whole Foods especially since they no longer have a niche all to themselves.
People who shop at Whole Foods do not want to rub shopping carts with the dirty people from Walmart.
I saw the strangest thing in Walmart about a week ago. I walked in and saw an attractive woman.
"That's the way to do it" - Punch
Maybe I'm wrong (and this is quite possible--after all, HL Mencken said that no one ever went broke underestimating the intelligence of Americans), but it seems to me that with Amazon turning itself into a crappy online flea market full of counterfeit merchandise, B&M isn't going anywhere anytime soon.
That said, Amazon has competition from other online sellers, including even Walmart.com, and of course Ebay, but also countless other smaller retailers that usually are more specialized, so B&M is going to continue facing stiff competition. But this doesn't mean that Amazon's retailing division is ever going to be profitable.
Comment removed based on user account deletion
You've got it all wrong. Upscale groceries aren't going "tits up", its just Whole Foods that is struggling because there's more competition in the upscale market than ever before. Since Whole Foods established a demand for natural/organic foods, there are now dozens grocers that are as good or better than Whole Foods, but with more competitive prices.
Well, as I keep saying, they'll destroy it that way. The people (like me) who shop there because of the more specialty things you can't find in most places will go elsewhere, and then they're competing with purchasing giants like Winco. They'll be trading high-middle-class and above money for middle-middle-class and below money.
If Amazon can maintain quality while reducing supply chain costs and expanding the customer base to get greater economies of scale tehy could turn Whole Foods into a serious competitor.
If it was a privately held company with a, "Quality is Job #1" slogan they actually believe in, that could happen.
In this case, however - where this was an investment opportunity/buyout by a large investor - I wouldn't hold your breath. Modern, large-scale business theory has a relatively new corollary they believe in: "Good Enough" trumps "Best" to most consumers. In several years, when Amazon's profits growth matures (and it always does), and stockholders start looking for new ways to keep stock prices going up (they always do), quality will be the first thing to go after they fire any remaining, expendable human workers.
Amazon is profitable, about on par with profitability for other large retail chains like Safeway and Walmart. About a 4% EBITDA.
Actually, my impression of the classist AC who started this thread was that he is some man-bunned Brooklyn Bubble-inhabiting pajama boy who wouldn't be caught dead in the same time zone with an evangelical Christian Republican.
Its just you or your location. Where I'm at (Seattle area), most stores have a self check out and it seems to work very well.
They're vitamins- an almost entirely unregulated market offering a product that has no health benefits for the vast, vast majority of people. Its modern day snake oil to begin with. How the hell do you counterfeit what's already fake?
I still have more fans than freaks. WTF is wrong with you people?