Whole Foods footprint is also far smaller than its largest grocery competitors, but is it big enough for Amazon to accomplish all it wants within the grocery space? There is often speculation about Amazon doing another large deal to augment its footprint. Whole Foods used Instacart before the Amazon deal and continues to do so, what does this relationship mean now that Amazon is pushing its own delivery service? Instacart has been lining up retail partners left and right, implying it's preparing itself should Whole Foods cut ties. The broader food distribution industry is already under pressure, a reverberation from the pressures (and bankruptcies) within the grocery sector. If it doesn't renew the contract, UNFI would lose a significant portion of its business and scale. Amazon could either renew that contract or attempt distribution on its own when it expires. Whole Foods relies on United Natural Foods for its distribution. The percentage of grocery shopping done online is small. Now, those grocers have shifted focus elsewhere, and the price they are willing to pay for a deal is far less. It used to be when life as a grocery store got too hard - or when control of a family-owned grocery store shifted to a new generation - they would call up one of the main consolidators, Kroger or Albertsons. They also can't rely on those retailers as an escape clause anymore. Many don't have the funds to invest in technology and capabilities as their larger competitors. They are looking to other grocers like Target, Costco and Walmart.įor smaller grocers, these changes could mean trouble and an uncertain future. As they give those brands more and more shelf space, new companies no longer view Whole Foods as the singular place to launch. ![]() Organic and specialty products, the space where Whole Foods made its name, remains a big focus for the industry. There's a big push for private label brands, which are more profitable for the stores. Retailers are also increasingly focused on fresh food, prepared food and even restaurants to draw shoppers to their stores. Unlike Amazon's shareholders, investors in retail companies punish retailers when their investments are unprofitable or take longer to pan out. Still, these retailers are at a disadvantage when it comes to technology investments. Walmart bought Indian e-commerce company Flipkart, Target bought delivery service Shipt, Kroger invested in British online supermarket Ocado and bought meal kit company Home Chef, and Albertsons also bought a meal kit company, Plated. In the past year, grocery stores have slowed their new store growth and instead focused on acquisitions of technology or platforms. It now trades at $24, a level that many industry sources say represents a new normal. Kroger's stock dropped from $31 to $22 a share when the Whole Foods deal was announced. The industry is not only scared by the marriage of Whole Foods and Amazon, it is also now facing the infiltration of European competitors Aldi and Lidl, discount grocers that are attacking traditional grocery stores on price. Things are changing outside of Whole Foods, too. ![]() Whole Foods has also begun to centralize its merchandising, which means it's now taking care of in-store displays and setup - rather than allowing brands to outsource the task to third-party services. The drawback is small brands with little plans to grow at such a scale might feel squeezed out. ![]() That approach simplifies operations and makes it easier for a brand to scale without traveling region by region. That means many small brands need to go through WFM headquarters in Austin, Texas, to get placed in a store, not through their regional Whole Foods representative. It has begun to centralize purchasing for its suppliers. The grocer's sale to Amazon though came with its own set of uncertainties, which resulted in those moves being viewed with a different level of scrutiny and tension. Whole Foods has been trying to solve that challenge since before its sale to Amazon, hiring Target's Don Clark in 2015 to help with the efforts. Dealing with each brand on a regional basis could prove complex. For Whole Foods though, devoting shelf space to small brands, especially those that aren't driving traffic, was not always good for the bottom line. Many small brands point to Whole Foods as the birth ground for their new products. One of Whole Foods' biggest challenges has been taking what set it apart - lots of niche and often regional products - and streamlining that into becoming a cost-efficient, national retailer. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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