Treating them above market or not, Amazon acquired the company for billions and not because Whole Foods was doing badly.
There was also an article that talked about the brilliance of Amazon biz organization. Business units are set up like API interfaces, ones that serve both internal needs as well as external customers. The author's claim is that it helps trim the fat, with what was normally internal services being exposed to market forces. It makes me also wonder about WF's fate from that perspective.
Groceries are not APIs.
If money weren't a matter, I would love to shop at whole foods: shopping for groceries seems more of an experience there than at other places. Maybe using Amazon's superior operations management would let them lower prices even further attracting more regular customers.
When I airbnb'd in someone's Portland home once, The host worked for another local alr grocer chain, proudly telling me it is like WF but better.
Just a tangent: the downtown Seattle WF has a fantastic eatery ... and in the months before I moved, it turned into a major Amazon employer hangout, after the Amazon HQ moved there. Now I marvel at the irony it is effectively an externalized company cafeteria.
TJ is a good deal for some things but it only somewhat overlaps.
What you will see is a relationship between Amazon Prime and WF. But, as with the case with Twitch, it will be Amazon that deals with that and WF will likely continue to do its thing while Amazon generates MORE customer loyalty and a new customer base.
Trader Joe's has limited selection and is mostly on the cheap side, often even cheaper than Ralph's in SoCal. Its the place I go for cheap produce that just happens to be organic/natural/etc... (though I don't really care about the latter).
Here in the Bay Area I'm really happy with Draeger's. Haven't really been back to WF much since I started going there. Unlike Trader Joe's it does have a reasonably complete selection of meats (and for specialty cuts there are local butchers).
https://techcrunch.com/2017/05/14/why-amazon-is-eating-the-w...
Flip side is that, according to this: http://www.bizjournals.com/seattle/news/2017/03/27/amazon-go...
There are a lot of troubles with the logistics around distributing produce. The models Amazon has for managing non-perishable goods is not working well for things like bananas. It would be stupid of Amazon not to try to learn from logistics experts from Whole Foods, and Amazon has a good track record for not being stupid.
Side note: just yesterday, my wife and I went to our local Fry's for our normal shopping. They are testing hand-held devices to scan items while you shop and then just settle at the self-checkout line; this was fairly new. We gave it a try just to see what the experience is like (and likely, by the time my step-daughter comes to age, something like this will be normal). I remarked to my wife that Fry's isn't sitting still, waiting for Amazon to take over grocery shopping with Amazon Go, either.
We had WF delivery for a couple of years. It was great for us. But, you could tell they were trying (unsuccessfully) to monetize it. When they curtailed it they offered a pickup service as replacement: Instacart is the app for placing orders. On the whole, the pickup service works pretty well except you don't get sale prices.
I can see delivery coming back now that Amazon is in the picture. I can also see a bigger push to sell prepared foods for delivery. Prepared foods are the real money makers.
https://www.google.com/search?q=whole+foods+stock&oq=whole+f...
http://www.chron.com/business/article/Kroger-s-darkening-out...
Amazon buying WF will likely have two results:
1) As long as Mackey can run the company WF employees will stay. Once he leaves (likely soon), they will leave. This is an opportunity for some other investor with Mackey's same principles to buy up WF's human capital. For example, Starbucks will benefit b/c former WF employees make good baristas.
2) Amazon will be left with the infrastructure of WF, primarily the real estate, warehouses, storefronts and whatever slice of humanity Amazon hires to replace former WF employees. So maybe Amazon wants WF primarily for the locations, the real estate and the warehousing capacity. They're getting a good price by buying while WF is at a low.
Amazon is simply too much - time for the monopoly-busters to break them apart.
What exactly does Amazon have a monopoly on?
Selling books? Nope, Barnes & Noble and Walmart and others compete there.
Cloud computing? Nope, check Google, Microsoft, IBM, Racksapce, Linode, etc.
Selling other random stuff on the net? No, Target, Walmart and a bazillion specialty sites also do that.
Groceries? Obviously not.
The idea behind anti-trust / monopoly law is generally to prevent a company from leveraging a monopoly in one area to gain excessive control in another area. I don't see how anyone can argue that Amazon are doing anything like that.
Being big and successful is not, in and of itself, wrong.
Yeah, darn those investors. How dare people with pensions, 401k's, IRAs, and other investments expect some kind of return on their investment? It's disgraceful. /s
EDIT: The sentiment against investors is rather ironic considering the amount of equity collectively held by HN readers.
Do you vote the proxy for all the funds in your 401k? Do you understand how your vote affects the above - it all does.
It might not be your intent, and you might not have enough of a vote to stop it, but you are still doing it. (sort of like Americans opposed to the current foreign policy are still at fault for it)
This might not be an option for everyone, of course.
If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.
Noted by a friend who used to work there:
- They treat each store (and each department within each store) like its own separate business, which is great for teaching individual managers about waste, efficiency, profit/loss. However they can't bother to get together on a corporate level and combine purchasing power on most things. Every store has to work on making a deal on their own merchandise, separately.
- In a show of solidarity, all employees, whether floor workers or corporate IT, must work holidays and instead have floating holidays for time off. Then predictably there is a seniority effect where the long-term workers get to have their holidays and the recent hires have to come in on a completely useless day and stay till 3 or 4 when the management "lets" them leave.
Also I recently shopped at their 365 store and it's a great store with better prices, but their website sucks and my name comes up as "firstname lastname" on their computers. If Amazon can knock some sense into their IT, that would be a huge win.
Imagine suggesting that any employee who was hired when the stock price was higher than the selling price now had to pay money to those who were hired when the stock price was lower. Fortunately, employees are not held liable for the valuation of the company at which they work. If they WANT to participate in that risk and reward they can buy stock--sometimes at a discount like Whole Foods offered.
I flat out reject this idea that people should get the bulk of reward simply for already having money.
Are you saying there should be less/no return for investing your money? If so, how do you suppose we incentivize investments?
I merely stated that the bulk of reward should go to those who actually DO something, not those who's only contribution is already having money. Of course they should get a return on that money. It just shouldn't be the bulk of the reward.
But investors are actually doing something as well - they are putting their hard earned money towards a venture. And as it stands today, we have more need for capital than 'actual work'. So it gets rewarded more. In simplistic terms, If you want an investor to put his money into a business you are starting instead of buying up rare resources or hoarding his cash, you give up equity. And hence their reward are relative to the money they put in.
I was just trying to see if you have any alternative plans to encourage such investment. This is back to basics economics as I know, but I don't know much there. Hence my query.