Amazon + Whole Foods Changing the Industry and Local Producers

Submitted by Mary Meade on April 23, 2018

Last June, Inc. purchased Whole Foods Market Inc. for $13.7 billion. This was one of the most widely talked about mergers of 2017 because of the possible impacts it could have on the grocery industry. Since then, Whole Foods has undergone several changes in branding and culture.

How has Amazon changed Whole Foods so far?

Some changes are subtle, such as ‘Amazon + Whole Foods’ signs by the bananas, while others are more obvious, such as Amazon Echos available in-store. More than 100 Whole Foods started selling other Amazon products, including Fire TV, Kindle e-readers, and Fire Tablets in late 2017. Additionally, Amazon Prime members now receive special discounts; Amazon Prime Rewards Visa cardholders who are also Prime subscribers will receive 5% cash-back on Whole Foods brand purchases.

In last year’s article, we highlighted how Amazon may use the organic grocer to conquer the “last mile” delivery dilemma and bring distribution centers closer to its customers. Amazon has followed through with this prediction and added Amazon lockers to some Whole Foods locations, allowing deliveries to be held in a secure location until customers can pick them up.

For current Whole Foods employees, the newly imported automation raises concerns. Amazon is increasingly using robots in their warehouses and has experimented with an all-automated store, Amazon Go, before. The online retailer also hasn’t had a great track record with its employees, who often work long hours with minimal breaks. Previously, Whole Foods was known to treat its employees well despite opposition to unions in its stores. However, the future for current and new Whole Foods employees under Amazon are still uncertain.

How are competing chains affected?

Immediately after the announcement that Amazon was purchasing Whole Foods, others in the grocery industry took notice. Although Whole Foods isn’t the most numerous grocery chain – with less than 500 locations in the U.S. – the gravity of an Amazon-owned grocery store suggests the online giant’s potential disruption of the grocery market. It wouldn’t be the first time Amazon has shaken up an industry.

Although Amazon did not disclose how much prices would be cut, customers are seeing reduced prices throughout the stores and can expect to see further cuts in the future. For other grocers, this means competition on the organic front from the most-well known brand of high-quality organic foods. Amazon is also offering free two-hour delivery for Prime members at certain Whole Foods locations – an option many other competitors don’t offer.

How do these changes affect Local Food Producers?

One thing that made Whole Foods unique compared to other grocery chains was their inclusion of local products. Now under Amazon, Whole Foods is “placing limits on how products are sold in its stores and asking suppliers to help pay for the changes, riling some mom-and-pop vendors that have long depended on the grocer for visibility and shelf space,” according to The Washington Post.

In the past, Whole Foods allowed local producers to set up a table and offer samples to onlookers – for many small producers, these interactions make up a large portion of their sales. Having customers see the person who made what they eat fosters a farmer’s market-like connection in a chain store. But with Amazon’s two-hour delivery service, local producers expect fewer people walking in stores and “fewer opportunities for producers to interact with and educate shoppers.” Many local producers have experienced less exposure and sales due to the changes.

To keep supporting local producers, customers will need to step outside of the chains and visit local farmers markets, co-ops, and natural grocery stores.  Although Whole Foods is still a better option than non-organic chains like Walmart, local organizations are the best place to find and support locally produced food. If you are interested in supporting local producers, find out when and where your local farmers market(s) take place here.

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