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Whole Foods Acquisition is a Wakeup Call to Independent Grocers

Whole Foods Acquisition

Much has been written about Amazon acquisition of Whole Food Markets. Every day brings an avalanche of opinions: from the industry pundits' speculations on a scope of inevitable disruption of the grocery industry to flash analysis of the Whole Foods price reductions. I decided to join the choir and offer my observations and opinions from a perspective of the industry ecosystem participant.

So far there were strong indications of higher traffic in Whole Foods stores after the acquisition and lower pricing on selected items. There are also reports on internal operational changes that have sent the vendors, brokers and distributors into a very unhappy frenzy. The most disturbing are the Whole Foods shoppers' complaints about the quality of organic produce and availability of products on the store shelves.

At the time of this writing there is no evidence whatsoever of any positive change from the perspectives of shoppers or the grocery eco-system. In fact, there is every indication that Amazon adopted a very hands off approach to Whole Foods management who continues to implement operational initiatives conceived long before the acquisition took place.

In the wake of the acquisition, some major grocery retailers announced significant investments into technology to combat Amazon's (technology giant) foray into their territory. Some, like Kroger, started to court smaller, regional product brands that are threatened by Whole Foods abandonment. That may be a very good development for artisanal food manufacturers, when and if it actually materializes.

Most analysis you can find focuses on the impact of the Whole Foods changes on very large, publicly traded companies. Very little is written about how the independent grocers, small batch product manufacturers, food brokers, demo agencies and merchandisers are impacted by these changes. There is some evidence of lower foot traffic in the independent stores and an ebb in the promotional activities by the brands on the store floors. However, many grocers we spoke to are in denial that a small grocery eco-system will be materially affected. And that is a mistake.

Amazon's Whole Foods acquisition

Thanks to Jeff Bezos's relentless focus on the quality of customer experience, i.e. long term sustainability of Amazon business, everyone assumes that the acquisition will produce some magical result and force a major change in how we buy our food. So far this "earthquake" is yet to produce a tsunami of change. Amazon does not always succeed, but it succeeds most of the time. Change now. Before you have to.

While the small, independent grocers cannot compete with the big boys' scope of technological investments, they can and should mobilize their eco-system partners to provide a better, more personal, experience to their shoppers. As Whole Foods pushes away their trade partners, who helped them to become successful, independent grocers could use this opportunity to forge closer alliances to provide more engaging shopping experience in their stores.

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