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About this blog: Growing up in Brooklyn, NY I lived in high-density housing and experienced transit-oriented services first hand. During high school and college summers I worked in Manhattan drafting tenant floor plans for high-rise office buildi...  (More)

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Is Amazon's Acquisition of Whole Foods a Good Idea?

Uploaded: Jun 18, 2017
But first, let’s revisit my post last April regarding Council Member Ray ("Sunlight") Mueller’s request for more transparency of city staff and council meeting with entities proposals to the city.

See. Council Member Mueller Asks for More Sunshine

Council Member Mueller asked the city manager to place on an upcoming agenda discussion of his proposals. Apparently, the City Manager and Mayor have declined.

Here goes.

A friend contacted me on Friday asking whether I thought that Amazon's (AMZN) announced purchase of Whole Foods was a big deal.
After a long 3 seconds I said: Yes, and thought about it during the afternoon.

1. Look upon this as acquiring a strong brand.. Whole Foods is a top luxury brand

2. Look at this as a real estate play. WF's locations permeate upper and middle tier end locations. Regardless of AMZNs intents, they would now control a lot of distribution real estate.

3. Look at Whole Foods worker structure: lower labor costs as they are non-union.

4. Consider the tension between brick and mortar stores, and the coexistence of luxury stores with their online counterparts. Apple comes to mind. Retail stores are popular when customer service excels.

5. Consider AMZN's mastery of delivery: long distance and last mile. Perhaps they'll succeed where Internet Boom/Bust I failed, i.e Peapod.

6. AMZN has an instant outlet for the top selling online products, reducing the cost of distributing those. Go to a Whole Foods and pick it up instead.

7. It's a data play. AMZN knows what buyers are buying and where, geographically. Recommendation engines? Would you like a roll of toilet paper with your tablet device? (Sorry the image).

8. It's about automation. More local historical trivia, but telling, regarding the irony of occasionally technology-unfriendly aspects of Menlo Park City Council.

When the Greenheart project on El Camino was originally proposed, the city was anonymously sued to block zoning it. The project envisioned a grocery store à la Whole Foods. It turns out that the nominal plaintiff was a checkout person at Safeway Menlo Park. The suit and subsequent resolution was to limit the size of the project’s large retail space to a threshold smaller than the minimum that a Whole Foods needed for a store. And, get this, the zoning agreement for the site prohibits self-checkout stations, which was the underlyng employee issue. Also, apparently most drone activity is barred in Menlo Park.

Comments

 +   12 people like this
Posted by Peter Carpenter, a resident of Atherton: Lindenwood,
on Jun 19, 2017 at 6:48 am

Peter Carpenter is a registered user.

Another key issue is this acquisition allows Amazon to utilize the existing Whole Foods retail outlet 24 hours a day.
Those outlets serve their walk in customers during normal business hours and then , when they would otherwise be closed, at night those very same stores become order fulfillment sites for the next days deliveries.


 +   3 people like this
Posted by Susanne Chang, a resident of Menlo Park: Downtown,
on Jun 21, 2017 at 8:03 am

I go to the Redwood City Whole Foods all the time! I do not buy all my groceries but things I see as a good value,such as organic bananas and carrots,cups of coffee,their organic peanut butter that is grinder and whatever seasonal fruit is on sale. Within the last year I have seen lots of changes to lure more customers so I can see they might be losing money. I have also noticed the turnover of the workers there,and they always seem to have a sigh that they are hiring. If the workers are non union and they are trying to live locally it woulld be very difficult!


 +   4 people like this
Posted by Alan, a resident of Menlo Park: Belle Haven,
on Jun 21, 2017 at 11:20 am

It's probably good for Amazon. I find it a bit unsettling how much power they are getting in the retail world.



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