The news cycle moves fast these days and big headlines fade quick.
You may remember a couple weeks ago that word came down from Jeff Bezos, CEO of a little company called Amazon, that he was going to buy Whole Foods for a cool $13.7 billion.
It was the biggest purchase Bezos has made in his company's history, and the timing couldn't have been better for Whole Foods, which had just announced a board shake up and cost-cutting plans due to falling sales.
When the news broke, every press wizard from Salon to Bloomberg published think pieces on the deal, and what it’d mean for the industry, the big chains, the market. But, as a watchdog for the citizens of northern California, I wanted to know how it was going to impact you and change the way you buy groceries.
The first thing I needed to do was figure out how healthy the industry’s been leading up to this sale, so I sat down with Ron Fong, president and CEO of the California Grocers Association.
"I think California's landscape in grocery is very healthy," Fong said. "We are the most competitive marketplace in the United States. People feel that there is allure, that if they come to California and they make it, they've really made it."
The California Grocers Association represents more than 300 retailers, including heavy hitters like Raley’s and Safeway. In spite of Amazon's recent deal, Fong remains optimistic that the state's grocery industry will continue to thrive, but how does that impact you, the 'foodsumer?'
"Delivery and convenience are two themes that our industry has been talking about for the past isx to eight years," Fong said. "It's not new, we all know that it's coming, our consumers are changing from the baby boomers to millennial shoppers, and the two generations shop differently."
Millennials like it fast and easy. They want to be able to order groceries at work on our phones, Fong said, then have them delivered.
"Your traditional baby boomer generation of shopper still like to go into a physical store," he said. "They want to pick out the steak they're going to buy, they want to squeeze the tomatoes and touch the avocado and the lettuce."
Now, enter Amazon, a delivery and convenience ace who’s managed to shrink their once five-day estimated deliveries to mere hours, and, with the purchase of Whole Foods, which has more stores in California than anywhere else in the U.S., maybe minutes. So, here's the score: We’ve got speedy Amazon grocery delivery for the millennials coupled with brick-and-mortar Whole Foods stores for the produce-fondling boomers.
How do the big chains compete?
"They're not going to sit back and just give up and say, 'Alright, you know, we've got Amazon and Whole Foods, we're done, we're out of here,'" Fong said. "This is going to drive them to compete quicker than they probably would have imagined."
Experts say this type of competition will only benefit the consumer, and while it’s true companies like Safeway have already started offering grocery delivery services at some of their locations, Rao Unnava, Dean of UC Davis Graduate School of Management, says Whole Foods’ brand perception will be hard to beat.
"Maybe they have equivalent quality, but nobody says Safeway is equivalent in quality to Whole Foods," Unnava said. "They think Whole Foods is much higher quality, overall, much higher price. And if they can reduce the price-difference perception, which they can with Amazon running the store, suddenly you'll start seeing the middle stores getting hurt."
I reached out to Safeway to get their take on the deal, and how the company may be impacted by the acquisition, but a spokeswoman told me they “don't comment on competitive acquisitions,” and did not respond to my follow up questions.
"With Amazon, it's just the world's supermarket," Unnava said. "It's got everything. Whatever you need you can type into Amazon and then either they sell directly as a retailer, or they have their marketplace where other people sell through Amazon to you. So there's almost nothing that you cannot buy on Amazon right now. That gives them tremendous power."
So what happens two years down the road, when a tremendously powerful online retailer suddenly acquires 431 brick-and-mortars?
"It will be more of a super-center, an Amazon Supercenter, with multiple things in it, and Whole Foods is one of them," Unnava said. "That's a possibility."
The supposed Amazon Supercenter may be a few years away, but the bottom line seems to be we, the food buying public, will ultimately come out on top, with more choices of how, when and where we buy our food.
"If you're somebody that really cares about convenience, and want things delivered to you at a good price and a good quality, pay attention to this, because this acquisition will give you a better product," Fong said. "This is not doom and gloom for our larger companies, especially. They will react to it very quickly. They will find a way to compete, and they will stay in the marketplace, and I think, in the end, the consumer wins."
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