In one of those decisions that will resonate for decades NPR reports that Amazon the giant of on-line retailing has bought Whole Foods for $13.7 billion dollars. That’s roughly three times the original cost of the proposed Massey Bridge.
Stock prices of large retail food chains such as Costco negatively reacted. Why? Because almost a quarter of all millennials bought food from Whole Foods last year, and Whole Foods has “a tremendous amount of credibility around the quality of the food and the reputation they have with their customer base.” While one of the challenges for Amazon was how to deliver fresh groceries “the last mile” having 460 Whole Foods stores in the United States, Canada and Great Britain can serve as distribution centres to solve that issue. Owning Whole Foods and using those existing facilities for delivery will be early adopter to a new way of on-line marketing of fresh food delivery through Amazon, and if successful change the retail landscape of grocery stores in cities and suburbs.
If Amazon is able to be competitive with prices and deliveries, this will also change how grocery stores function with other uses including cooking classes and education, not just the standard retail transaction. It also means that many grocery stores will be under pressure to either offer a home delivery similar to Amazon, or change their retail model to survive. While one in ten meals served in the USA are pre-prepared and bought, grocery stores may morph into “grocerants” where the classic buy your own groceries will be increasingly coupled with restaurant use. Grocery shopping has previously been only a small component of Amazon’s sales. Buying Whole Foods could be the classic disruptor in how food is distributed, and change grocery pricing, shopping and delivery drastically.