BY SANDY LUNDAHL — Customers at the Whole Foods Market on Baltimore Avenue in Riverdale Park are concerned about unemployment, unbridled corporate power, and possible loss of a unique shopping experience as they discussed the impending purchase of Whole Foods by Amazon.com, an online retailer and cloud computing company.
“What about our cashiers?” asked Ed Koren, 73. “Who’ll make my pizza?”
Koren said he can’t imagine drones delivering food to his house. He acknowledged that we are all resistant to change.
“What’s going to happen to the cashiers?” said Clonel Norelus, 30. “There’s great energy in here — doesn’t feel like your ordinary shopping trip.”
Norelus said big companies buying other big companies is the norm. It’s best, he said, when a business is in financial trouble to sell. Norelus buys products on Amazon, but not food. “I’m not there yet,” he said as he wondered out loud whether companies can get too big.
Looking over at the cashiers, a third customer, William (who declined to say his last name), 56, spoke about the long-term consequences. “Think about what happens when there is increasing unemployment.”
People at the top, 200 billionaires, compete among themselves, said William, adding that they have a lot of “ego” invested in how much money they make and how much they control. They don’t notice what happens to the other 80 percent of the population, he said.
“It’s like when you walk out into the parking lot and don’t notice the number of ants you’ve stepped on,” said William.
Whole Foods store management at the Riverdale Park location declined to comment for this story. One employee, who declined to be named, said they knew about the impending sale before the announcement on June 16.
Whole Foods CEO John Mackey, speaking to an employee town hall on Monday, June 19, called the deal to buy his grocery chain a “whirlwind courtship,” saying the two companies met on a “blind date” a little over six weeks ago and now are “officially engaged,” reported the Washington Post.
Amazon for years has been looking for more ways to gather information about how consumers shop, said the Wall Street Journal.
“How consumers purchase in stores is drastically different from online,” said Kevin Howard, CEO of Adroit Worldwide Media Inc., as reported by the WSJ. Consumers are more likely to browse and make impulse buys in store, whereas shoppers are more targeted online, he said.
“When Whole Foods first opened in April our sales dipped, but now we are back to normal,” said Haley Dietz, 21, employee at MOM’s Organic Market on Rhode Island Avenue, three miles north of the Whole Foods.
“We have a community atmosphere here, which will only get better when we move into our new location [where REI used to be] and offer prepared foods,” said Dietz.
How do you get fresh organically-grown produce to online customers?
MOM’s owner Scott Nash should know. Nash started his organic produce business in 1987 by delivering fresh organic produce to people’s homes and then expanding into mail order. Thirty years later, MOM’s has stores in four states and the District of Columbia, employs over 1,000 people, and has created a corporate culture centered on protecting and restoring the environment.
For 20 years now, people have been trying to disrupt the “perpetually uninfiltrated bricks and mortar grocery industry,” said Nash. “Home delivery, meal-in-a-box delivery, consumer supported agriculture home delivery, and even Amazon Fresh have failed to work. The only successful online grocery company that I know of operates in New York City, a unique marketplace.”
“Food is different than books, appliances, shoes,” explains Nash. “People come into my stores looking for multiple ingredients to make multiple meals for multiple days. It serves an instinctual need to forage, to be a part of a community, to create, and to touch, smell, and see exactly what you’re buying.”
Mackey pondered the future of Whole Foods on June 19 with his employees, reported The Washington Post.
“They are more customer-centric than we are,” Mackey said. “One of my takeaways is that, by God, we’re gonna become as customer-centric as Amazon.”
Things are going to change, said Mackey.
“When this deal closes, we’re all Amazon people — one large tribe, one large family.”
Undercutting quality would be “the death dust,” Mackey said, adding that they’ve been assured by Amazon that quality standards will not change.
Mackey compared the grocery chain to being the “class dunce” when it comes to technology, saying he hoped they would end up as the industry’s valedictorian.
Comparing Amazon to other companies that have tried to purchase Whole Foods, Mackey said the other companies didn’t care about the stakeholders or long-term value. Amazon is different — they have had the courage to resist the drumbeat of short-term, quarterly earnings.
Spokesmen for the two companies told The Washington Post that no layoffs would come as a result of the merger and that no job automation was planned.
Since Jeffrey Bezos founded Amazon in 1994, he has put expansion and innovation ahead of profit, says the Wall Street Journal (WSJ). In its early years, free cash flow — cash from operations minus capital spending — hovered around zero. Bezos approaches new products like a venture capitalist. Many will flop (like the Fire smartphone), but some will be home runs (such as Amazon Web Services, its cloud computing arm). Amazon is now profitable, yet cash retention remains secondary to retaining customers.
Amazon announced on June 16 that it would buy Whole Foods Market Inc. for $13.7 billion, including debt, said the WSJ. The acquisition, Amazon’s largest by far, gives it a network of more than 460 stores and would make Amazon an overnight heavyweight in the all-important grocery business.