Happy Anniversary, Amazon-Whole Foods. What's Changed?
The grocery chain is basically the same. Look to rivals to see the big difference.
One year ago this week, Amazon.com Inc. loudly declared its intention to become a grocery industry heavyweight by announcing its agreement to buy Whole Foods Market.
The $13.7 billion deal practically guaranteed sweeping change in a segment of the retail world that hadn't yet felt the sting of e-commerce. By marrying Amazon's digital prowess and appetite for price-cutting with Whole Foods' well-established perishables supply chain and network of stores, it seemed a trip to Whole Foods or a tap of the Amazon app was about to become ground zero of food-shopping innovation — and a top choice for customers.
Flash forward to today, and if you’re looking for clear evidence of how this deal has transformed the industry, you won’t find much at Amazon or Whole Foods, though Amazon remains a formidable force in online groceries. Rather, it’s in the flurry of counter-actions taken by their spooked rivals.
Whole Foods is basically still the same chain it was when Amazon bought it. Sure, there have been price cuts on some key products and an additional discount on sale items for Prime members. But the kiosks displaying Amazon gadgets and deals on Mother's Day tulips? Those things are more cosmetic. Whatever Amazon’s grand vision is for Whole Foods and digital grocery, it seems, for now, largely unrealized — or at least unseen from the outside. And Amazon investors appear to be content to give the company time to keep plotting and tinkering.
No so the old guard of the grocery world. It doesn’t have that luxury, which was made plainly obvious when investors sent their shares tumbling after the deal was announced. Industry leaders Walmart Inc. and Kroger Co. seem to have gotten the message and are dramatically increasing the reach of their online grocery offerings. While nothing can completely inoculate them from the threat, they are now better equipped to compete and might even gain early-mover advantage in markets that Amazon and Whole Foods haven't blanketed yet.