Jerri-Lynn here: I’ll admit up front that I’m not a huge fan of Whole Foods– although occasionally, I’ll brave the crowds to pick up items after a shopping foray to the Union Square Greenmarket. I’m posting this for its discussion of the inevitable crapification of the Whole Foods product if the proposed Amazon acquisition indeed successfully closes.
Also, I’ll mention that the suggestion at the end regarding a possible Wal-Mart response to the pending deal is perhaps made tongue-in-cheek– as I think it leans toward the fanciful.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street
Here’s something Wal-Mart could do to Amazon, just to be nasty.
Amazon expects to slash jobs and other costs at Whole Foods, “a person with knowledge of the company’s grocery plans” told Bloomberg. The ink isn’t even dry on the proposed deal, but synergies and efficiencies are already being trotted out.
Amazon agreed to acquire Whole Foods for $13.7 billion, a 27% premium over the stock price on Thursday at close, and now intends to push down prices to slough off Whole Food’s nickname “Whole Paycheck,” and go after Wal-Mart Stores, Target, the German discounters Aldi and Lidl that are expanding in the US, Costco, and grocery store chains, such as Kroger and the private-equity owned chains Safeway and Albertson’s.
The jobs to be cut include cashiers, who’d be replaced by Amazon’s own “Just Walk Out Technology,” now being tested at its Amazon Go convenience store in Seattle. When customers with the Amazon Go app on their smartphones walk into the store, the system logs them into the store’s network and establishes the connection to their Amazon account.
The system uses “computer vision, sensor fusion, and deep learning,” Amazon says, to track everything customers pull off the shelf. If customers put an item back, the system removes it from the virtual cart in their app. When done, customers can just walk out without having to go through a check-out line. The system will automatically charge the customer’s account and send out a receipt.
This system would replace the cashiers at Whole Foods, “according to the person familiar with the matter, who asked not to be named because the plans are private,” Bloomberg reported.
So not the cumbersome self-check-out machines we’ve been grappling with for years, but something that would allow Amazon to differentiate itself. However, the main advantage would be a radical reduction in labor costs at Whole Foods stores. The “employees remaining would help improve the shopping experience, the person said,” according to Bloomberg.
Amazon also expects to make a number of other changes, including to the merchandise the store carries, all in order to push down prices. Amazon would introduce private-label products – in addition to Whole Foods’ existing private-label products – to replace products that it considers too expensive. So get ready for Amazon’s food brands.
These changes won’t take place until after the transaction has closed, which is expected to be later this year.
The grocery price war is already red-hot. So the high prices that have hobbled Whole Foods over the past two years will likely be gone.
After Whole Foods becomes part of the Amazon empire later this year, it no longer needs to make significant and growing profits. That quaint concept is out the window. Amazon is like so beyond that. It can lose money, no problem. On its own, Whole Foods could have never done that.
An Amazon spokesperson denied everything. Amazon has “no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned,” he told Bloomberg in a statement.
Alas, almost all acquisitions of this type entail efforts to find synergies and efficiencies, as they’re called, to bring costs down to make the transaction work, which translates into hefty job cuts. And since the deal is far from closing, there need not be official “plans” at this point.
Amazon has made an art out of pricing, with prices jumping up and down dramatically, depending on who is looking at it, what kinds of cookies and browsing history they have on their devices, and what is known about them, for example when they’re checking a price while logged into Amazon.
This “variable pricing” model – which has spawned an entire sub-industry to defeat it – has spread to other retailers and can drive astute shoppers nuts. Of course, airlines and other industries also have used it for years. It would be interesting to see if Amazon can figure out how to move it to its brick-and-mortar stores – say, with prices only being posted on smartphones with the Amazon Go app when you get to the product.
Amazon is also going after low- and middle-income shoppers. For a mass-market retailer, it needs all customers. It already has cheaper Amazon Prime memberships for customers who are on government assistance, according to Bloomberg. And it’s testing a program to deliver groceries to recipients of food stamps.
Now if Wal-Mart Stores wanted to put a little squeeze on Amazon, just to be nasty, it could offer something like $4 billion more for Whole Foods so that Amazon would outbid Wal-Mart by offering another $2 billion or $3 billion, at which point Wal-Mart would walk away, celebrating, and Amazon would have to come up with $20 billion to buy Whole Foods, not $13.6 billion, which could dent its credit rating and make things just a little harder for Amazon in the future. Just thinking out loud here.
When Amazon announced the deal, shares of Wal-Mart, Kroger, Costco, and Target get crushed. Read… Amazon, the Death of Brick & Mortar, Buys into Brick & Mortar
Not sure if UK market comparisons are applicable to the (subtly different) grocery retailing business in the US, but here several of the big chains have tried the “Just Walk Out” gimmick.
A good read across for Whole Foods is the UK’s Waitrose. Very similar product lines and customer demographics. Also a similar brand image. Waitrose attempted the scan-as-you-go then just leave (you did need to insert a credit or debit card as a last step but if you are under £30 you can use “contactless” cards so the additional time and effort is trivial). It wasn’t via surveillance, AI or “deep learning” either, but again you only had to pick up a scanner “gun” when you entered the store.
A few customers tried it but the novelty soon wore off. For one, it’s a right old faff. Mentally, you interrupt your browsing process and your choosing frame of mind with having to cover for when the system failed and you had to manually find the SKU bar code, scan it and make sure you’ve not messed it up. Then you have to do the work arounds needed for loose items (look up the numbers from pictures which is hard if you’re buying, say, loose bread rolls of which there are maybe a dozen choices) then enter a quantity. Finally, there’s the inevitable need to do corrections for when you’ve double-scanned something. Oh, and every so often someone will do a random check as you leave to stop shoplifting.
In the UK too, there’s a variety of human checks needed for alcohol purchases, sharp item purchases such as kitchen knives and solvents in household cleaning items. You have to go and find a member of the store staff if you trigger a “verification needed” product.
Needless to say, for your typical Waitrose customer (and I dare say Whole Foods customer too) all this was kind-of like your maid saying they want to join a union and you have to clean their room — an elite class warfare and crapification step too far. If you want to be treated like rubbish and be charged for the privilege, you can go to Asda WalMart for that sort of thing.
Yeah and I always noticed on my returns to the UK when based in Sydney (2009-2015) the deeper distrust of customers compared to Australia: self service check-outs always having a weighing scale attached to check that the weight goes up by approximately the right amount when you scan something (which fails abysmally so often due to light items not registering, in addition to the issues you raise).
However, scandal struck in Sydney whilst I was there – even the very well-heeled customers of my local Woolworths and Coles on the lower North Shore were fiddling the system, touching the screen to indicate the cheapest apples when posh ones went into their bag; scanning so quickly that it was easy to ‘miss’ an item (that went straight into their own bag – which isn’t weighed). I wonder if the Aussie supermarkets have gone the British way with scales….they certainly never seemed to do any random checks of people, nor even appear to be watching the customers.
One of my local Walmarts had self-checkout lanes and then took them out–probably because of the shoplifting problem. While quite a few stores where I live do have self-checkout, there’s always a station–not always occupied–where an employee stands and monitors what people are doing. As I’ve said here before the self-checkouts in the grocery stores at least seem to be more a matter of convenience rather than labor savings as there are always human run checkouts which the majority of customers seem to prefer. If Amazon did follow the rather far fetched plan described in the above article then it’s hard to imagine that Whole Foods wouldn’t also have human cashiers to go with the smartphone walkouts. Not everybody has a smartphone.
The dynamic pricing/experimental economics doesn’t work without a smartphone (or equivalent). Therefore, if one doesn’t have a smartphone (or equivalent), one won’t be able to shop there. Suspect there will be loaner Kindle Fires available at the entrance, but one would have to log into their Amazon account.
Personally, dynamic pricing is just too much f**kery for me. Consider what happens if, though big data analysis, Amazon is able to determine that I’m hungry when I enter WF and prices things accordingly. If I am on the snack food aisle. If I am in front of some quinoa chips (as I have a history of buying quinoa things). Betcha a popup alert tells me (and not the person next to me) that the chips are priced at only $X where X is estimated to be the most I will pay at that exact moment in my life for a bag of quinoa chips.
They’d be wise to have Kindle Fires they could loan out to people not only if they don’t have smartphones, but if they have cheap ones like mine that don’t seem to function on command without a lot of finessing. Unfortunately, I have visions of the on-loan Kindle Fires dying out on us in the middle of the shopping trips due to low battery charges, like the abandoned electric scooters we see in the middle of Walmart stores.
just because one has the disposable income to shop at Whole Foods they assume one has a smart phone. But we all prioritize what we want to spend our money on (and how we want to be tracked as well), and it doesn’t always line up like they think it does.
I’m sorry, but this entire article makes me feel completely depressed. Iys not just Amazon’s seemingly me glam an I can quest to own/control everything, it’s the bald dehumanisation of the sometimes pleasant, socially interactive practice of shopping for one’s daily necessities. Yes, it’s all a matter of degree, & we have self service registers etc, etc … but… ?
If he does this, he’ll just kill the brand. It’s been implemented in stores like Albertsons and abandoned.
Self-checkout leads to more shrinkage (theft) than cashier costs it saves.
And many upscale people don’t like self checkout. The stores are in upscale areas, so getting rid of the speciality products will also kill the brand. I go to the one in my mother’s ‘hood only to get a particular yogurt that is really tasty that only Whole Foods seems to carry. I often pick up a few more items when there. But I won’t bother if they get rid of the good oddball products. Whole Foods made a big deal of “qualifying” the makers of a lot of its stuff, like small brands of crackers, sauces, condiments, ice creams, teas. Get rid of that and why bother with them?
Whole Foods is about class, and lowering process and eliminating servants will kill it.
Our Walmart has the TSA guy to make sure no one shoplifts. I always get stopped because I had been buying printer cartridges at Walmart (main reason for going to Walmart – they are much cheaper there than at Staples) and for some reason they always trigger an alarm. So then I have to wait longer while the guy goes through all my bags…..
I’m going back to Staples to get them from now on……I’ll just try to do less printing…..
FWIW, I grew really tired of replacing printer cartridges, especially those from HP with minuscule amounts of printer ink exorbitantly priced with firmware and device drivers determined to cease all printing functions after 6 months (to ensure the quality of my printer’s output, for my benefit, thanks, Carly!).
So, I print at Staples. I take a USB memory stick with PDFs and print them. At 7 cents/page, it is cheaper than owning a printer, buying cartridges, buying paper, making sure everything is up to date, etc. Kinda keeps me from printing stuff willy-nilly, too.
If you still want to print at home, you might try the cartridge refill service at Costco.
I have watched a lot of stealing at Wal~Mart over the years. Several times down in Texas there were people walking out of the garden center pushing carts LOADED with unpaid groceries, children in tow. All kinds of inside jobs where big money went missing. Things that you would be amazed.
I used to do new store setup and take them through opening. Back in the good old days, ha, what a mob like time that was.
In fact, back in the eighties when I was there, some of the security detail were actually people who had been busted for theft. I do not have a clue what he/they were thinking on that, I always wanted to ask but never did.
My local Walmart also has two self-checkout lanes and I avoid them both. I want a human being so that when the wrong price pops up (which happens all the time with clearance items) it can be straightened out quickly.
P.S. I do not have a smartphone so I guess I won’t be going into Whole Foods ever.
” I want a human being so that when the wrong price pops up…..” Axiomatic in the retail food business; so many people come to their local grocery store to “mingle” with other human beings. Even the “automatic” checkstands get shunned. The last image of any retail establishment is the checkout person. If that relationship is loused up for whatever reason, the customer will remember. Whole Foods has never been my schtick. Having spent most of my life in the perishable food business, grower, wholesaler, retailer, merchandiser etc…..Whole Foods never impressed me except their bakeries and when paying the bill at the checkstand. You still need experienced perishable foods employees and they are becoming harder and harder to find and the training because of the low pay puts the squeeze on the profit margin doubly. I don’t see anything that Amazon will really do with Whole Foods but maybe get burned and maybe wreck whatever business is there turning it into “just another food retailer” competing in a more competitive market. But, what the heck! With billions to burn at real cheap rates and a gullible and malleable consumer to hoodwink, who knows!!??
Yes, there have been attempts to bring in automatic charging systems for at least 30 years – I’ve a vague memory of many years ago seeing a TV programme about a Tesco designed system where shoppers could just wheel an entire trolley past a scanner which would tot up the cost and the customer would pay at a kiosk. These systems always look great in theory but for all sorts of reasons don’t stack up – not least as you point out the legal requirements in many areas for visual checks on items like alcohol or weapons. I’ve noticed that the most cost conscious of companies – Lidl and Aldi – seem (at least in my neck of the woods) content to stick with old fashioned cashiers.
I wonder if the thinking behind the Amazon system is not so much saving money, but of building up even more detailed databases on peoples buying behaviour. But most supermarkets already have plenty of data on this from peoples store cards. Presumably it would be interesting for them to know that, say, someone has a habit of picking up expensive wine and then changing their mind, putting it back on the shelf, but would that really be worth millions in investment?
Here in in Ireland, its been noticeable that while outside retailers do well, domestic retail chains have been able to hold their own by being more receptive to local retailing quirks – even though they are tied to big distribution networks the local shops are often quite distinctive, with managers and staff able to make changes in response to subtle local demands. The bigger chains, with all their analytics, can’t seem to be able to do this. And of course some very successful big chains, such as the Spanish Inditex, are well known for using floor staff as a knowledge base to feed back information on customer needs to the supply chain and so keep ahead of what buyers really want (as opposed to whe fashion industry tells them what they want). For all the hype, I do think that data analytics still struggles in many circumstances to replicate the ability of good staff to know what their customers really want.
Obviously, only Amazon knows what it wants from Whole Foods. It may be that they simple see it as an ideal open research unit on more prosperous customers, and would be happy to make a paper loss on it for that reason. But if they think they can drive down costs to compete with Wallmart or the German discounters, I think they may have a rude awakening, those companies know exactly what they are doing and have decades of experience at it.
One of the local grocery chains in the DC area [Giant] has utilized the “hand-held scanners” for a number of years. I used to use them because one’s check-out process IS fast: just scan a bar at the register & pay.
However, there are SO many problems that it’s just not worth it. Produce is a particular devil: you must bag & label your produce in the section. This means finding a scale & hoping that it works. And, as someone noted above, locating the picture of the correct item so the machine will produce the right tagging label.
If you’re buying easily scanned canned items, the process is okay. Otherwise, it’s a pain. And all of this seems to operate like TSA’s Pre-check, with regular “checks” to assure customer honesty.
it’s fast if the grocery store is understaffed. But one might pay for an upscale grocer precisely so it won’t be understaffed in terms of check out clerks.
Personally I think that Costco has the fastest checkout of all.
I doubt Amazon’s plan for WF will be faster. Home Depot often only offers self checkout so I always ask for help. I don’t want a store with noone around to answer questions when something goes wrong.
Years ago, Paul Fussell in his analyses of the U.S. class system noted that self-service means no service. Sometimes, I think that the stress on self-service in the U S of A has to do with Americans being so bad (and getting worse) at personal interactions.
Just as “go paperless,” means Abandon Hope All Ye Who Enter Here–especially if something goes wrong and you have no receipt / no monthly report / no financial backup, so the self-service grocery store is just a way to force the customer to do the work that the company should be doing. Think of the new fandango of having to print out your own tickets to an event before you go, too.
I am reminded of tipping in the U S of A, in which the customer is required to solve the bad personnel / pay practices of restaurateurs (in particular).
odd that Americans are perceived as bad as personal interactions as America is the ultimate extrovert society, no place for introverts, some Scandinavian countries like Denmark are rumored to be societies that value introversion, America not so much so. “Must be a team player …”
doubt that is true anymore. Heck, the mythical “couple on a date who stare only at their cell phones” is a common meme.
Ditto (in a non-Rush Limpballs sorta way) to what DJG said about Americans being bad at personal interactions. I’m glib, so at checkout counters and other customer situations, I usually pop out a quip. Just to make things more human-to-human, less robotic. I’m not talking about going on at length (like this comment) but just something short, usually humourous. Aussies will usually banter back, and when I lived in Canada, staffers there generally had something to say. I got stuck in the U.S. (my native country) several times over the past year and most of the clerks I riffed to were mooks. I’d pop out a one-liner and draw a blank, or get “uh-huh” in response. Like chatting to cows. I don’t know whether it’s the shock of having a customer actually SAY something — “this guy’s talking to me. He must be a weirdo!” or mental dullness. But criminy — Merkins are bloody flat-footed when it comes to their tongues.
Translation: “You’re fired!”
Also of note since this deal was announced, Amazons price movement in market cap space (3%) made the deal ostensibly free.
Amazon; ever determined to keep proving why capitalism cannot function without regulations and high taxes for big business.
Redefining Big Box, so you can live in a small one.
After-thought: Do these tycoons and their enablers understand that once one person wins the game, all the assets become worthless? Economy is based on circulation. It is a form of communication dependent on the energy generated by its movement, not massive accumulation (i.e. a blood clot). You aren’t going to get that campaign donation when nothing is left.
No, I don’t think they get that.
I think it’s like the old bumper sticker (anti-war): “He who dies with the most toys WINS”
I don’t think these fools see an end-game, other than naked power for themselves.
Dukkha – they don’t understand dukkha.
For a second there (until I Oogled it) I thought you were referring to the crunchy Egyptian mix of coriander seeds, nuts and spices which is popular in Middle Eastern restaurants Down Undahere. I wasn’t sure how that related to the post, except you can probably buy it at Whole Foods. But now I know the Buddhist meaning of the word! Now that I have learned something new for the day, I can shut my mind down until tomorrow. Which will mean closing the NC tab on my ‘puter. Too much lernin happnin here.
This is one thing that’s plaguing Germany (and the EU) right now: German industry is too powerful for the Euro, so they are exporting at lower prices than they should. And what do they do with their massive profits? Pile ’em all up. Everyone’s saving, no spending, austerity all around. So Germany’s money is a big ol’ clot, doing nothing useful. Or anything at all.
I keep thinking that Amazon will try to remake Whole Foods into Trader Joes. Far less fresh food and far more shelf-stable and frozen goods, preferably all house brand. And if they shrink the offerings in the store, they can convert the extra space into package pick up locations or some other fanciful ship to home operation.
Why do I think this is all just an experiment? If I was Jeff B I would eventually want to get into the financial industry. If he cozies up with Main Street he could easily take out of chunk of the big banks…who many still despise but have a difficult time getting rid of with auto pay, etc…
I could see Amazon Bank being the real end game….
Back in 2005 Walmart announced plans to offer banking services to its customers, and it seemed it might be a good thing especially for those who are “unbanked” due to lack of affordable bank plans or whatever.
In March of 2007 it was announced Walmart had totally abandoned such plans. Seems big banksters were very much against it…and Barney Franks was against “industrial” banking.
I thought there had been plans more recently for checking accounts, but I haven’t seen anything about that.
I’m not an expert here, but Wal-Mart does offer some types of “bank-like” services. Some of it is providing cashier’s checks and money transfers.
I only know this bc a friend of mine LOVES Wal-Mart with an unbridled passion and I got roped into going there right before Xmas while they did an exchange. It was, as expected, a horrible experience (no sense in going into details here).
While waiting at least 45 minutes for this exchange to happen, I was parked in front of their “Customer Service” (ha ha) location. There was one lone person run ragged doing a vareity of tasks on what appeared to me to be very ancient computers – it looked like they were running DOS (not kidding but not sure).
In addition to processing exhcanges – an unnecessarily laborious process – they were attempting to provide cashiers checks (being Xmas, quite of a few of these were requested) and other types of money transfers.
There were six or seven (really) quite huge signs with disclaimers about how none of these financial transactions were guaranteed in any way and it was all on the hapless “consumer” if they didn’t work out.
Looked really shonky to me, but I suppose some citizens have no choice but to use “services” like this.
Quite possible. Bezos started out in the financial industry, at Bankers Trust and D.E. Shaw (and maybe one or two other places).
that’s what 365 stores were already approaching, lots and lots of packaging.
Amazon has made an art out of pricing, with prices jumping up and down dramatically, depending on who is looking at it, what kinds of cookies and browsing history they have on their devices, and what is known about them, for example when they’re checking a price while logged into Amazon.
This is criminal behavior.
Not criminal – it’s price discrimination from Economics 101 – eliciting each individual’s willingness to pay and charging that, rather than an average price.
The morality of it is another matter entirely….all the consumer surplus is appropriated by the seller.
He is referring to retail pricing laws, which states have set so that the customer gets the lowest price for the item. This includes advertising, stickers, and shelf pricing. There are ways around this by offering “discounts” to special groups, which Amazon can easily do by saying “well the sticker price is $ 2.99, but we are offering it to you at $2.24! because you are part of extra special buying group 4-B.” Plus none of the laws really refer to an “extra special online” price, just publicly visible pricing.
Good point. As far as retail pricing laws, Amazon would be playing the “disruption” card the way Uber flouts taxi licensing laws, AirBNB flouts innkeeping laws, etc.
ah thanks! And as you say, they always know how to get round the rules.
On the other hand I’ve figured out how to game their shipping/postal costs. 99% of the time I’m in no rush, so normal (“free”) postage via Royal Mail or whatever is what I choose….leading to the warning that everything must be posted together (so whichever good takes the longest to process defines the wait). In practice they always send my goods as soon as each is ready (doing me *such* a big favour – rolls eyes), so I’ve avoided the postage charge without the downside. I think the fact once in a blue moon I do pay postage for something I need quickly is enough to keep them trying – otherwise I’m sure their big data algorithm would make me wait for everything.
> He is referring to retail pricing laws . . .
An algorithm that is used on the public should be disclosed to the public. So far, nobody knows what the hell is really going on when this stuff is concocted under the guise of competitive advantage. That Amazon resorts to these clever schemes to present a price customized for your wallet, and you can’t check what someone else is getting for the same or similar product, should be flat out illegal.
As someone wrote the other day: Amazon/Whole Foods is looking more and more like AOL/Time Warner. A business plan scam being played out in plain sight with near term crapification (including a botched smart checkout implementation) and eventual vaprization of WF and its market share. Traditional grocers only need fear the Wall Street hype, not actual losses in real profits, so long as they refuse to panic. The big box operators are more at risk because their own forays into grocery could soon be challenged by a resurgence in local grocery (that the WF debacle may actually accelerate, especially if they try to emulate it). Their futures will depend on maintaining the good will of Main Street rather than Wall Street.
I said that. And, after reading this post, I am doubling down on my AOL-Time Warner bet.
If this ends Target’s half-assed attempt at being a grocery store, I’m for it.
I hope so. To judge by my local WF, it was already slowly going crappy, so Amazon will just accelerate that. I mean the largest shareholder of WF was Goldman Sachs, so you can imagine. GS cut their stake in WF earlier this year, possibly to zero, and have apparently helped Amazon with the buy, which is curious. Anyways, the only reliable grocery near me is family owned.
Here is an idea: Leave your smart phone at home. Go to the Amafoods store, fill your cart, and attempt to pay for your purchase with cash.
Hilarity ensues …
Reminds me of Eddie Izzard, just taking all the groceries for a walk in the store then leaving them.
Not funny。 on a recent trip state side, I tried to pay for $43.xx of food with a $50 note. The clerk call the office, and the manager sent someone to get my car tag and report me to the police. Apparently they hoped I had enough cash to allow the police to confiscate it, and the police share the proceeds with their informants.
Have they not seen a $50 bill before? Like last year there was a story about a little elementary school girl trying to buy her school lunch with a $2 bill her grandma gave her, and the lunchlady called the police because she had never seen a $2 bill before apparently and thought it was counterfeit…
Try paying with a handful of Sacagawea coins and see the looks you get.
Or Susan B. Anthonys. (Anthonies?) Been there, tried that recently while cleaning out my dead sister’s coinhoard. Spent a few minutes ‘splainin each time. Wish I’da had some Eisenhower half-dollars to flummox ’em more.
Wow that is a seriously scary tale. Not altogether surprising… Pretty soon it will be:
* Pay with cash? TERRORIST
* Don’t have a smartphone? TERRORIST
* Not an Amazon Prime member? SORRY YOU CAN’T SHOP HERE
Anyone else wonder why the world’s second-richest man (Bezos) is allowed to monopolise retail and online shopping, have a $600B contract with the CIA, and still own the USA’s 2nd or 3rd most influential newspaper?
$600 million contract, a mere pittance when the operation’s scale is considered, so lets not exaggerate by a factor of a thousand. Peanuts for the CIA, and Amazon.
Apologies and well-spotted cnchal. I stand humbly corrected. It was a typo, not an error, but no excuse.
Whole Foods was always absurdly expensive. Trader Joe’s has good produce at a fraction of the price. Amazon only has to reduce the Wholefoods prices just a little bit to start eating into the Trader Joe’s market share . I’ve spent enough time in the US to realise that compared to the UK food is very expensive . Part of the cost difference I suspect is the vast distances a lot of this food is travelling . That and the uncompetitive nature of the market place in the US .
It will be interesting if it cuts into Trader Joes business…but their model is very different. The folks who work at my local TJ…LOVE the company. There is very little turn over and the employees are very loyal. The shopping experience is much better than WF’s and other stores (with maybe the exception of Costco by me).
Same experience with TJs and Costco.
I don’t have a WF near me, and I could care less. I am lucky to live in places where there are locally owned grocery stores that are somewhat similar to WF, but for much less cost.
This just looks like an effort to crappify WF.
WF was just killed in one affluent local market (Davis, CA) by the local family owned chain (Nugget). They shut the store down.
If it is not going to be scanned at any time, produce will play hell with this unless everything is bagged or packaged. That is going to alienate a lot of the whole foods customers. Add to this chipping everything is not going to be cheap. And no I don’t think it is going to save enough on labor costs overall, especially as people are going to game the system. Or find that the system games them with no recourse causing them to stop shopping there.
But going self-scan also will not work. It just is not fast enough, at least here in Manhattan. Not for lots of product. Slowing down your five /ten/twenty check out lanes for people doing their own scanning is going to annoy the hell out of the shoppers. The scanners I have dealt with are also notoriously prone to hiccup and demand a cashier deal with an issue (usually waved away as terminal error). Both Whole Foods and Trader Joes lines move very quickly for their lengths here, and I have still seen shoppers just leave at a certain point. Double or triple the time the line takes and people will just stop going.
I use Amazon more than a lot here. And have encountered a few screw ups from their ‘automated’ system – mismarked items, etc. But extrapolate that percentage over large grocery lists shopped once or twice a week and those “few” mistakes are going to become a huge amount of them. While customer service has been very helpful, and I have never paid for the mistakes this is a recipe for disaster. Either they still just eat the cost of the mistakes OR they start sticking the customers with them – losing customers. It just is not going to work.
>It just is not fast enough, at least here in Manhattan. Not for lots of product.
You are competing with somebody who does this for 8 hr shifts regularly. I often amuse myself watching two or three people (including myself) with full loads get checked out whist a person with a modest amount of groceries works their self thru the “self” checkout. And that’s for the rare person that even makes it thru without having to get somebody.
Worse, at I think Lowe’s (maybe Home Despot) they have times where there is nothing but self-checkout. I went there just to buy bolts/nuts/washers….and found out much to my bitter amusement that there is no way to buy those without assistance.
So… you go over to the self-checkout “helper”, she identifies the hardware from like 20 pages of bolts/nuts, hits a few buttons which then sends the info back to your “self” checkout station…sigh.
Teh Stupidity it burns.
So now you;re going to need a stupid-phone just to go to the $#!*ing grocery store?
I occasionally shopped at Whole Foods but after I heard the announcement of the Amazon purchase I have switched my “higher-end” grocery shopping to Harris-Teeter.
I routinely go for walks with just my wallet and some cash… sometimes just cash alone. No phone of any kind. It is wonderfully liberating and a bit subversive.
If I had a pound for every young woman I see walking down the street staring zombie-like into her phone I’d never have to work again. Apologies if that seems sexist but I don’t observe it quite so much with men.
I have shopped a few times in the States on visits at WF, but if this goes through never again.
The jobs to be cut include cashiers, who’d be replaced by Amazon’s own “Just Walk Out Technology,” now being tested at its Amazon Go convenience store in Seattle.
Anyone been to the Amazon Go store? Is it an in-house store for an Amazon work location?
“Just Walk Out Technology,”… I have to wonder if this slogan originated as a joke by a burned out and sarcastic marketeer who was subsequently amazed that they took it seriously. I bet their next brainchild will be a sale pricing strategy named “Five Finger Discount”!
A redeeming feature of WF has been its customer service and ease of returns. This will soon go out the window. Acquisitions like Amazon buying WF are paid for by employees getting fired, lower wages and sub sandard products with higher pricing. I hope they’re unable to compete with Trader Joe’s.
I can see Apple fanboys rushing in with their iphones but this will wear off soon. What a dumb idea this self check out is.
I’m not a fan of Whole Foods, and their founder is a libertarian goblin much like Bezos, however, I have some friends who are current or former Whole Foods employees.
My impression was that they treat their cashiers and staff pretty decently. Especially compared to Wal-Mart. Whole Foods became a sought-after job that a lot of former retail workers effected by the retail apocalypse hoped to transition into, mainly because they provided health insurance. Also a bit of a 401k, paid vacation and sick leave, etc.
If Whole Foods transitions into an all self-checkout model, or crapifies the jobs to Wal-Mart level, it is just going to further put the squeeze on some workers who thought that maybe they had found a modest refuge from the worst effects of the modern American workplace.
That’s unfortunate, for sure.
Any time jobs are lost is not a good thing, and one thing that looks certain with this acquisition is that jobs that may be sort of decent are going bye-bye. It’s too bad.
If all the people, every last one, who shop at WFM were to shun Whole Amafood and do all the buying they used to do there at other stores instead, would that grow the bussiness at those other stores enough that they would have to hire the fired Whole Amafood cashiers? It sounds like an experiment worth running.
On two occasions recently, supermarket clerks asked me to confirm the identity of radishes. I think cameras at the checkout station and vegtetable recognition software could solve this problem, and then self checkout will be easy.
How about just training the checkout clerks to recognize the vegetables?
Then they might get uppity ideas about being able to taste/afford those vegetables, themselves.
They will also start giving opinions on vegetables and your ability to select fresh ones, which would be similar to uppity video rental store clerks who used to critique your Terminator rental.
Vegetable recognition software – if that was a joke, then it’s hilarious!
I can’t wait until smoke starts coming out of the machines as they try to tell the difference between a turnip and a rutabaga.
Not to mention cilantro and Italian parsley. Or organic and inorganic.
The loser isn’t Wal-Mart, it’s Costco and Target.
After considering the annual Costco membership fee and time needed to shop the cavernous warehouses, Whole Foods + Amazon Prime membership is looking like a bargain.
And having an Amazon online order shipped for free or at a discount to your local Whole Foods will push traffic to stores from non-Prime Amazon shoppers.
As someone who works in publishing, I would like to point out that, just a few years back, when Amazon engaged in predatory pricing with regard to books, it was all, Information Wants to Be Free! and Bookstores Are Unresponsive! and Publishers Are So Nineteenth Century!
And now Amazon wants to make a mess of the food-distribution system, too, eh.
Can’t wait until Amazon decides to go into the medical business…..online diagnoses anyone? Take your own blood samples and ship it direct…..
Need an IV? Amazon will ship you the medicine and send you instructions….
Did they buy Ancestry.com yet? Free genealogical screenings for Prime members!
probably not in that business yet, you are thinking of Oracle …
And Walmart’s brainless corporate heads can’t figure out the way to fight off Amazon is to make their stores “friendlier” and easier to shop in? Instead, they too are cutting workers and trying to force people to the kiosks to be “just like Amazon”………my last experience at Walmart was so bad – extremely long lines even at the kiosks (seriously a 30 minute wait?), nowhere to put your groceries with those shorter checkout counters, having to get another cart so that I could unload one cart and put the bagged groceries into another cart, ripped bags, etc- I don’t think I will ever go back…..
Sorry, but I like to choose my own groceries, especially fresh foods and meats, so I’ll still be shopping brick and mortar, but I’ll go to Albertsons or Fred Meyer or Costco or whomever…..so, Aldi, when are you coming to my neck of the woods?
Aldi store brand products are just so…vile…though. Even if they are cheap
It depends on what it is. Many of their private label products are just as good as name brands and in some cases better than some famous food brands. But there are some items to avoid.
Aldi has been in my town for years and has been wildly popular. They haven’t succeeded by simply being cheap and selling junk. You could say they’ve followed the Walmart formula of cutting prices to the bone while still offering reasonable quality. Whether they are fair to their employees I couldn’t say but they do work them hard. The stores have very little staffing.
Food Lion attempted something similar, in their offshoot Bloom, using scanners. It was a complete flop in my area of the country (Carolinas). For time crunched parents, adding complexity to the chore of grocery shopping is stupid. Or people with mobility issues – arthritis/MS – people with partial use of hands. That’s one way to make sure your customers are only pretty and healthy.
For anyone with any experience with software bugs (like googles delay send and delay delete email – renamed as a perk) – the potential for over charges and other mistakes, not due to the user are potentially huge. It could be the inflated weights on prepackaged meals on steroids kinda’ mistakes.
They’ll switch from paying for clerks to paying for CSR’s and IT troubleshooters (in India where their customers ID will be stolen).
Couldn’t happen to nicer couple of gents.
Just returned from a shopping trip to my local Safeway and saw something surprising: a large yellow “cabinet” along the way to the exit, market “Amazon locker.” It was not yet operational.
At first I thought, “oh no, they’re going to go after Safeway too?,” assuming they’d utilize this as a place buyers could have the groceries they’d ordered on-line stored, and then come pick them up. A little on-line research suggests that instead it’s a place where folks can pick up items they’ve ordered on Amazon — delivered to the “Amazon locker” instead of their home address. [I assume this is to deal with the issue of purchasers not being home at the time of delivery.]
Still, I could see Amazon tweaking this to cannibalize Safeway as well.
So Wolf thinks WMT has $4B laying around just to make AMZN pay $20B for WFM instead of $14B…okay….
Aside from that, whats with the AOL/TW comparisons. TW was like a $160B acquisition w/smaller AOL doing it, AMZN is paying $14B for WFM.
It’s more telling that Mackay is selling WFM at this price, $42 vs the stock peaking in the mid $50s just a few years ago.
AMZN currently offers Amazon Fresh which at least in my place in CT has made us not go to the grocery store. We do go to Costco solely for fruit and milk but once AMZN offers better fruit, there will be no point. AMZN has their Essentials line which is cheaper than other branded products but nobody is forcing you to buy them.
AMZN is just the best rentseeker of them all. WMT arb’d their labor costs, said ok, we’ll get these employees to make up the difference in comp off food stamp subsidies. AMZN is saying i can one up you, I’ll have Lt Cmdr Data do all of that at no cost, and btw I can get the US postal service and their employees to get those last few miles which may be the most costly in delivery to the customers. We get our groceries on Sunday by the mailman from AMZN.
>So Wolf thinks WMT has $4B laying around
Um, not seeing your point. Hell any one of like 10 Walton kids do have 4B laying around?
>AMZN currently offers Amazon Fresh which at least in my place in CT has made us not go to the grocery store.
Well if you like crap you can have it, I guess. It’s unfortunate that people who actually can tell the diff always wind up screwed. I don’t mind paying more for local food, I don’t even mind (although I have some, and I can really see how others are completely screwed) chasing around to farmers markets and the like. But for some reason the competitive nature of bozos like Bezos means they have to crush everything.
I guess I can just hope that they and Walmart eviscerate each other, leaving an ecosystem of smaller players. I, quite a long time ago, not sure where (Max Sawickly’s site?) predicted that Walmart would declare bankruptcy by 2025. Still standing by that.
WMT bought Bonobos for <$400MM, an e-commerce co, yet Wolf was arguing WMT could spend $4B on WFM to cause some consternation to AMZN, or basically buy more brick and mortar and double down on a strategy they are trying to transition from.
Amazon Fresh is bringing food from other grocery stores – Stop n Shop, Shop Rite, etc. so I am many others were relegated to general mainstream grocery channels in either case. And yeah so I like crap from them, the point of the AMZN/WFM deal is AMZN gets a source of groceries that has whether right or wrong perception of being healthier, higher quality.
AMZN's already won vs WMT, they are now taking out the grocers and soon will be putting CVS to bed.
Shop your local organic co-op if there is one (“hippie grocery store”). If you have colleges or universities in your metro area, should be at least one of these.
Also farmers’ markets this summer, and any local CSAs – Community Supported Agriculture – as well as any community gardens in your area.
This is Starbucks vs. local coffee joints all over again. Vote with your dollars if at all possible; chances are pretty good any option will be cheaper and likely better than Whole Foods. (Co-worker in my IT department a former manager at Target – food waste there fairly incredible even with donating as much as possible to local food banks and shelter kitchens. This in a college ‘town’ of 300,000.)
Letting the same people who gave us the crapification of everything (CoE which Yves and Lambert need to trademark ASAP) as well as the Great Recession which continues for many actually control our FOOD SUPPLY strikes me as close to the height of contemporary insanity.
the nearest co-op is an hour or so drive away and co-ops have a history of going out of business as they can’t manage competitive grocery store margins plus high rents. And this despite people shopping them out of good will more than them being a good deal. Maybe hippies sometimes live up to the reputation of not being very good as business, and you need to be at the top of the game to succeed as a grocery store, it’s the last business in the world a dilettante is going to succeed at as it’s super competitive.
And no any option is not going to be cheaper than Whole Foods. Some options are, but there are plenty of more or equally expensive high end grocers (which are a good option for Whole Foods alternatives but don’t expect the wallet to be that much heavier). Farmers markets can be expensive as well, they know they can charge $7-$8 for a box of best quality heirloom strawberries and so some of them do …
A baseless slander of co-ops and farmers’ markets, in my experience.
There are about 15 co-ops running successfully 20 or 30 or more years in this tiny (often progressive) rural state. They succeed because they are grounded in their specific communities; provide access to local foods; support the local economy; are priced competitively as often as possible; and because enough people care about the local economy, good food and fair wages. Yes, the ones that last are in areas where there are enough people who care, and yes, the threat of shoppers choosing (or forced to choose) store by low prices alone is always there. Sometimes you need to put yourself out a bit.
And yes, farmers’ markets are not conduits for cheap industrial food, but there are not many farmers around here tucking away dollars. We prefer to support local farmers so that there still will be local farmers and we are not forced to buy only from Amazon 10 years down the road.
See if your state has an organization like this one:
The business directory is a real treasure:
People who agree with that will have to accept higher prices as the price of preserving a parallel food system for our long term health and survival benefit. Here in Ann Arbor I have food choices, here in this Food Rain Forest. We have 2 Whole Foodses as well as more other stores than I can sit here and remember. I went to one of the Whole Foodses once to take a look, including at the people and the cars in the lot. I have continued to pay as much as I need to in order to avoid the WFM in general.
So I have choices. When Whole Foods becomes Whole Amazon, I can choose not to choose them. I can only hope enough other people choose likewise to keep all the stores I go to from going extinct all around me.
Hmmm, I’ll try to follow the people that chose to or are made to leave WF if they go to, or start, companies that keep doing what we like about the Whole Foods facilities we have used. Part of our relocation decision, is based on the availability of a nearby Whole Foods store with the types of great employees (and customers) we met at several of them. If Amazon screws this up, we will start minimizing Amazon use, too.
Meanwhile, back at the Amazon Cloud (server ranch), …..
“198 million Americans hit by “largest ever” voter records leak
“Personal data on 198 million voters, including analytics data that suggests who a person is likely to vote for and why, was stored on an unsecured Amazon server.”
Yeah, companies should learn how to secure their servers. The fact that they used AWS is tangential to this:
Nowhere – The theft is inside. That is a real problem with gatekeeper pay and race to the bottom on wages.
The person stealing that data can set up a site and sell it for $200 a pop to 10,000 buyers. Yes, some is public info but aggregating it is more expensive. And if caught declare bankruptcy after paying off your mortgage or student loans.
Many comments on self check out regarding produce. To me this is now a more easily solve and business opp. RFID chip which is almost cheap as paper and bar code nowadays. A smart entrepenuar would start a company just for this purpose.
So they have data on pretty much everybody (but I’m sure Amazon just stores that data and would never ever use it for their own purposes…) and have just proven they can’t keep it safe.
And yet moar technology is going to solve all the problems in the grocery business (the main problem being Bezos having to pay people) –
My prediction – some bright kids somewhere are going to hack this and a lot of people are going to start getting free groceries from Amazon. Maybe the company isn’t just a useless parasite after all – they’ll now have a philanthropic arm.
I didn’t see this here yet. How despicable.
Amazon has a patent to keep you from comparison shopping while you’re in its stores
It was linked here the other day. And it’s particularly cheeky in light of this.
I went to Safeway last night. The person in line ahead of me at 10 p.m. was a slim woman in her late teens or early 20s. Due the the big pile of junk food she had (ice cream, candy bars), and her bright eagerness to chat with me, a dumpy middle aged female (I cooperated), I figured, “huh, someone with an eating disorder.” She was rung up, and the register spat out coupons like crazy. The cashier remarked on it – she asked the girl if she had entered her home phone number; that she’d rarely seen so many coupons. The girl said yes. Then the cashier started reading aloud the coupon types – ice cream, ice cream, laxatives, ice cream, candy bars, laxatives, ice cream, laxatives. And made some quip about laxatives.
The girl paid up and fled. I think she may end up seeking a mechanical check-out system.
You have witnessed future crime. The other day I went looking for a special barbeque sauce, and by the third place, Krogers, it hit me. I was looking down this brightly lit aisle, almost too bright, and every package was a riot of colors packaging stuff that was actually detrimental to one’s health. This food production system has an externality that the medical system exploits, and it is cumulative to GDP so is considered good by economists. I think it’s a total waste of resources front to back. Even the damn BBQ sauce is crap, really. Anyhow, I never found it but did get a bunch of exercise and drove around.
How much fatter is America going to get ordering from Amazon. Probably 50 lbs extra each, in twenty years. What that means is the second order effect of moving people around will require heavier duty transportation, more mass there, and exponentially more energy to move lardass around. I see many synergistic moves Amazon can pull off. For instance, their algorithms can be tuned to sell more sugary crap to people and then take over a drug company so they have something to sell you on the back end too. By that time insulin can be delivered automatically by drone whenever the Amazon probe in your butt tells it to.
Here we come… assuming there’s energy enough for this.
“How much fatter is America going to get ordering from Amazon. Probably 50 lbs extra each, in twenty years.”
No kidding. Finally buying a car at age 33 (we had to because of dog health problems) was good for a twenty pound gain. Back when I had to schlep all groceries home on foot and carry them up five flights (when we lived in Chicago), weight was not even an afterthought.
The sort of people who used that app are the sort of people who deserve to live in Amazon’s world. Let us hope there are enough people who would NOT use that app . . . to support a parallel store system for themselves alone by shopping/buying NOW at the stores they would like to see be a part of that parallel store system LATER.
And if we can keep a parallel store system alive just for ourselves and eachother, we can keep it a secret from the Amazombies in our midst.
This will be an interesting experiment. I think the number of Amazombies who flood into Whole Bezos will outnumber the number of Whole Foodies who leave. Other yuppie-upscale food markets will be waiting to offer the Whole Foodies in Exile a new home.
A map-comparison between where the WalMarts are and where the Whole Food Markets are would be fascinating. Would there be extensive overlap? Or are they spread across different areas from eachother?
What is the average distance in miles between any WalMart and the nearest Whole Foods? What is the average distance between any Whole Foods and the nearest WalMart? If it is too far to easily go from one to the other, then Whole Bezos won’t attract any shoppers from WalMart.
I think Bezos wants to run various experiments on his Amazombie fan base in a food store setting. Whole Bezos will be run as a series of test beds and petri dishes so the Mad Doctor Bezos can perform various techno-retail experiments and information-harvesting engineering studies.
Some gifted digital photoshopper or photosurgeon should do a midway morph combining the faces of Doctor Evil and Jeff Bezos. They could call the hydrid face the face of Doctor Evil Jeff.
One company I didn’t see mentioned here was instacart. Instacart shoppers are always around my local WF, but I’ve never seen them in any of my local WF competitors. I’d assume Instacart customers would be Amazon customers, given the same selection. If you’re willing to pay WF prices, adding the Instacart premium on top isn’t enough more to make much of a difference.
Suddenly all those Instacart dollars are going to Amazon/WF. Amazon no longer has any incentive to subsidize Instacart purchases, which will make WF-through-instacart less appealing. Shopping WF through Amazon can be cheaper as well. Amazon can now take what appears to be a large chunk of Instacart customers. One less competitor for Amazon.