Amazon Eats Whole Foods

A few people wonder: “what do you think it will mean now that Amazon is acquiring Whole Foods?”

Here are my “arm[less]chair thoughts” about the Whole Foods Acquisition by Amazon touching on a bit of local economics, and company culture. Of course, it’s perspective from an attentive layperson’s point of view informed by how Whole Foods established its location in Detroit ever since their announcement to the Detroit Economic Club (I once-upon-a-time was a member of the American Economic Association and University’s Economics Club).

I’m probably missing some nuances that other people might know as someone who worked within the company so please do chime in especially if I’m off-base:

Whole Foods already had little issue about crowding out local markets–in some ways, it functioned a bit like Walmart. Amazon absolutely has no qualms about putting local brick and mortar businesses out of business, even if we give leniency in saying some companies like Borders Booksellers were slow to adjust to online reading. “Customer Obsession” aside, it’s competitive aims are a specific part of the company culture and part of its corporate DNA (AKA Company Values).

It’s amassing a lot of monopolistic capacity in ways people don’t really pay attention to unless it’s already affecting them, and the way they operate financially, it gives them even more buffer for underhanded monopoly strong-arming than a company like Walmart or Lowe’s has. Picking between Amazon and Walmart, Walmart turns into the less-bad of two choices because they will still have a physical presence in a city or some community. Like Walmart or Lowes, Amazon will likely eagerly exploit Dark Store tax loopholes every time they can expand with another Whole Foods location. I also think we’ll start seeing some changes in supplier choices over (a long) time if/when the big data infrastructures of Amazon are able to merge with Whole Foods (assuming a case can be made that justifies the cost of trying to revamp the systems).

That said, there will always be a need for smooth transactional convenience, that’s not something I’d fault a business like Walmart/WF/Amazon with–it’s specifically one of their strengths in the market. Acknowledging that, things go downhill when you consider how they’re willing and able to strong-arm local businesses (and small cities, maybe even state governments) into the ground with unfair strategies like dark store tax loopholes and price slashing or rewrite laws in their own favor that reduces consumer protection and genuine market choices.
Considering how inaccessible Whole Foods can be for a lot of the general population (myself included) though, it also means a VERY steep opportunity (as in, very challenging to get started/maintain and/or coordinate whether your company is a start-up or a been-up [been-ups=business that’s been around operating even if the media doesn’t pay attention to it for decades as described by Crain’s Detroit and Blac Detroit]) exists for local/organic/whatever businesses that will thrive on a relationships-first, I like this place because I-know-and-trust-the-owner/employees/farmer basis.

Maybe we’ll also see echoes of the book industry happen within an online version of Whole Foods. IKEA, the Swedish Walmart of Furniture and meatballs, is pondering if not testing what would happen if their business went on Amazon too (see this aptly named INC. article: “And Then Suddenly Ikea was like, ‘Wait. What if We Just Sell All Our Stuff on Amazon?”.


What it means for the rest of people who really care about localized/organic/co-operative/whatever food is that the smaller businesses and local suppliers will need to organize so that they’re able to coordinate and keep a place at the policy table when decisions are being made municipally, state-wide, and nationally because a major monopoly-scale industry will likely write the legislation.
I’m less familiar with Bezos’s acquisition patterns, so grains of salt with the following as it’s a bunch of thoughtful speculation: What matters for Whole Foods in the shorter-term will be whether they can preserve the positives of their existing employee culture (including benefits) now that they’ll be part of a company that doesn’t value employee wellbeing across the heirarchy (i.e. working conditions at Amazon distribution centers were terrible, and a reputation for employees in middle management burning out into dismissal is something I’ve heard from a few candidates) in the same way. I think this might eventually depend on how clearly WF demonstrates LEAN value in its HR practices.

REFERENCES:
Amazon related

Amazon & IKEA
https://www.inc.com/bill-murphy-jr/ikea-selling-on-amazon-big-news.html

Amazon vs. Brick and Mortar
https://www.forbes.com/sites/retailwire/2015/11/04/amazon-the-bookstore-killer-opens-one/#1c4f2460417d

Amazon vs. Brick and Mortar community impacts
https://ilsr.org/before-you-click-infographic/

Amazon Labor Practices
We should note that a lot can change in a few years, especially in a company with high employee turnover. The following articles may point to trends from the past instead of current practice so in some modicum of fairness, I also included their INDEED reviews.

Amazon & Sears Under Investigation for Labor Violations, 2016:
http://fortune.com/2016/03/30/warehouse-amazon-sears-labor/

Workers expected to strike in Germany:
http://fortune.com/2016/12/21/hundreds-of-amazon-warehouse-workers-are-expected-to-strike-in-germany/

http://gawker.com/inside-an-amazon-warehouse-the-relentless-need-to-mak-1780800336
https://ilsr.org/amazon-workers/

http://www.indeed.com/cmp/Amazon.com/reviews?fjobtitle=Warehouse+Worker

Amazon’s Expansion & how it affects jobs–note, we run into the quality of work/quantity and efficiency of labor spectrum debate in some of the ILSR’s arguments:
https://ilsr.org/amazon-stranglehold/

Overview of reports/studies on localization by the ILSR:
https://ilsr.org/key-studies-why-local-matters/

A view on how both mom & pop + big box retailers might co-exist (depending on conditions)
https://www8.gsb.columbia.edu/articles/chazen-global-insights/mom-and-pop-vs-big-box

 

The “Dark Store” economic/legal taxation tactic: exploit old property for unfair tax advantages that benefit major big box companies regardless of impact on the local community. As seen in places like Sault St. Marie, MI:
https://www.bloomberg.com/news/articles/2016-12-08/how-big-box-retailers-
weaponize-old-stores

Other “Dark Store” coverage in Michigan:
http://michiganradio.org/post/what-dark-store-approach-valuing-properties-means-communities
http://michiganradio.org/post/local-governments-could-recoup-millions-appeals-court-ruling

On what’s not working with Michigan’s municipal financial system:
http://michiganradio.org/post/michigan-cities-team-offset-fundamentally-unsustainable-municipal-finance-system

Update: a similar case is going to the MI Supreme Court
http://michiganradio.org/post/dark-store-case-makes-its-way-michigan-supreme-court

Some folks think big box businesses don’t hurt small businesses, I’ll disagree to an extent but see where they’re coming from.
https://www.forbes.com/sites/prospernow/2012/12/04/big-box-retailers-vs-local-retailers-survival-of-the-most-creative/#472d2ebc6790

 

DSCN2414.JPG

Featured photo of an organic pesto pizza–not from Whole Foods, but it looks like something you might buy from them. It’s from family-owned Silvio’s Organic Pizza in Ann Arbor. Disclosure: I occasionally play gigs at this restaurant but was not sponsored to promote them in this post.

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