Skip navigation
Coronavirus

Does Amazon Even Care About Whole Foods Anymore?: Sarah Halzack

The chain’s sale gains during the pandemic haven’t matched those of its competitors.

(Bloomberg Opinion)—Months of stay-at-home living have not brought Whole Foods Market quite as much of a bounty as you might expect.

The upscale grocer, owned by Amazon.com Inc., experienced a sharper year-over-year decline in traffic to its brick-and-mortar stores in September than its competitors did, Bloomberg News’s Matt Day reported this week. While its total sales are estimated to have grown during the pandemic, the gains haven’t matched those of other grocery chains, Day said. In some ways, it’s surprising that Whole Foods has not outperformed its rivals. Many of its customers are relatively affluent, the kind of people who have been able to work from home amid the public health crisis and thus have not suffered a loss of income. Those same teleworkers are likely spending more money on groceries than they did before the pandemic, when networking happy hours and business lunches were still routine.

But it’s not that simple. The pandemic has favored one-stop shopping destinations as customers consolidate store trips because of safety concerns. This has been good for general merchandise stores such as Walmart Inc. and Target Corp. and a hurdle for specialists such as Whole Foods and Trader Joe’s.

There are also signs that Whole Foods just isn’t a primary focus of its Seattle-based corporate parent. Amazon remains intensely interested in cornering a greater share of the grocery market, but it has not consolidated its efforts behind Whole Foods. After making some initial price cuts at the chain and intertwining it with its Prime loyalty program, Amazon hasn’t made many transformational changes at the retailer it acquired in 2017 for $13.7 billion. Meanwhile, it has plenty of other grocery experiments underway, including its cashierless Amazon Go convenience stores; its somewhat larger Go Grocery stores; and an Amazon Fresh brick-and-mortar store that is essentially a traditional supermarket.

The debut of the Fresh store, in particular, set off alarm bells. The early price cuts at Whole Foods suggested Amazon was trying to erase its “Whole Paycheck” reputation and make the chain appeal to a wider swath of consumers. The Amazon Fresh concept seems like a concession that Amazon is not going to be able to turn Whole Foods into an everyman’s grocer. Or, worse, the concept could be a sign that Amazon is flooding the zone with grocery offerings that simply cannibalize one another’s business. 

With so many vehicles for grocery experimentation, it appears Whole Foods is becoming something of an afterthought for Amazon. It certainly seems to be for investors: On Amazon earnings calls, no one has asked a Whole Foods-focused question in more than a year. 

That lack of attention would have been hard to imagine when this deal was announced, when the merger was treated as an industry earthquake and chatter abounded that traditional grocers would soon to meet the fates of Borders bookstores or Circuit City. So far, those fears have been misplaced. That is evident in Whole Foods’s struggle to keep up in the pandemic-era grocery wars. 

To contact the author of this story: Sarah Halzack at [email protected]

© 2020 Bloomberg L.P.

 

TAGS: Leasing
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish