While I share the sentiments of most commenters and will miss the shopping (and professional interest) experience of Whole Foods of the last couple decades, this really can't be much of a surprise to anyone. Why would Amazon be interested in Whole Foods' mission of offering a unique assortment of natural/organic/local products to a now leveling-off consumer segment? Does Amazon care about being an arbiter of organic and healthy? Is that really a big growth play in Amazon terms?The value of Whole Foods to Amazon is more about the footprint and the 365 private label. That's where Whole Foods can help Amazon grow. Squeezing some margin out of the ongoing operations to fuel deeper penetration into grocery e-commerce actually makes sense for the broader Amazon/Whole Foods enterprise. Just not for the John Mackey/Walter Robb vision.
What makes a good hardware store a preferred destination is 1.) excellent service/counsel/problem solving and 2.) a long assortment of just the right part/tool to solve the problem.I can't imagine Kroger/Ace staffing a home repair expert in grocery stores, nor dedicating sufficient space to having just the right washer and nut to solve my problem. If they're just upgrading their selection of flashlights, smoke detectors and multi-purpose tools, I'm not sure Ace adds that much to the equation.
For decades we've witnessed the balance of power shift from the manufacturer to the retailer, driven by consolidation, private label development and retail marketing prowess, among other dynamics. The shrinking of center store has long been a concern for big CPG as retailers have sought to differentiate their stores with the perimeter departments that are less dependent on the brand power of manufacturers. But now we're witnessing the power shift from the retailer to the consumer/shopper, who wants to and can control when to shop, what assortment to consider, what price to pay and how it reaches the home. This consumer also seeks unique challenger brands that convey his/her personality, priorities and ethic, further squeezing the big brands.Organizing by some definition of "health" is not the solution. We know that what counts as "healthy" varies from shopper to shopper and year to year, unless the retailer is only catering to a small niche.For larger grocery retailers, one fork in the road is whether center store should be merely an easy-to-shop, efficient means of stocking up on staples or an interesting retail-tainment treasure hunt that encourages browsing and reinforces a certain store image. Either way, the perishable perimeter will remain the retailer's primary driver of traffic and differentiation.
I have a hard time seeing Amazon win a price game with Whole Foods. Even if they subsidized down to parity vs. traditional grocery, Amazon's strategic advantages won't be highly leverageable to a Whole Foods price war: logistics of the last mile are much trickier with 4-5 temperature states, and scale can't quickly expand supply of organic products. Current shoppers will gladly take the savings, and few other shoppers will convert to Whole Foods for parity pricing on even superior products (especially if it's a selective price advantage).Amazon will wring other value from Whole Foods's brand equity, footprint/retail presence, private label assortment, etc. but winning on price will not be key. They did get our attention, though.