Adventus

"The central doctrine of Christianity, then, is not that God is a bastard. It is, in the words of the late Dominican theologian Herbert McCabe, that if you don’t love you’re dead, and if you do, they’ll kill you."--Terry Eagleton

"It is impossible for me to say in my book one word about all that music has meant in my life. How then can I hope to be understood?--Ludwig Wittgenstein

“The opposite of poverty is not wealth; the opposite of poverty is justice."--Bryan Stevenson

Tuesday, June 20, 2017

Woe is us!


Since I shopped at Whole Foods back when it was "Whole Floods" (I'll explain in a minute), I am an expert on the purchase of Whole Foods by Amazon.

Well, as expert as anyone else is.

Whole Paycheck is, and always has been, an elitist institution.  That's what it is, that's how it stays in business.  I shopped there very infrequently when I worked in downtown Austin and could walk to the original store ("Whole Floods" because it sat the the bottom of a valley created by the landscape and caught all the water flowing down in two directions.  The store took to marking the high water marks by painting a water logo on the side of the building and dating each one.  WF didn't leave that location until well after it went public in the '90's, if memory serves.) on my lunch hour.  I shopped there for organic meat when no one else carried it (and still I ate just hamburger.  The prices for steaks or non-ground meat was too much to bear.), and remember it had almost no sugar at all (not even "evaporated cane juice," one of the funnier euphemisms of the "natural foods" movement).

Later, after it went public, WF started carrying Imperial Sugar; white and brown.  I don't think I ever got over the shock.  (You can't be a publicly traded grocery store chain and not sell regular sugar.  That, for me, is when WF lost its "do-gooder" reputation.)

What I never saw was WF crowded.  Well, the original store was, but it was tiny and crowded with more than 2 customers in the place.  The grocery near my house I use now is a Texas chain, and it doesn't even cover all of Texas.  Still, the store is crowded on the slowest days (it's very popular), and it ain't catering to the Wal-Mart crowd (largest grocery seller in the country, I'm told).  I occasionally go to the nearest WF (for vitamins, mostly, and a cheap French wine I can't find anywhere else), and even at Thanksgiving or Christmas, I've never seen it as crowded as the store near me on a slow day.  There are two WF's within driving distance of me (about equally inconvenient to me); one I avoid like the plague because the shoppers there are even snottier than at the other store.

Which is the funny thing about WF:  it used to be a hippie store, and while the hippies could be annoying in their own way (where do you think vegans get the attitude?), they are not snotty.  WF is now the realm of the nouveau riche, and I think that's why tout le internet is so upset that Amazon has bought them.

Typical is the response that Amazon will now rule the retail world, buying up a grocery chain of 400 stores that serves a select clientele.  The Slate article mentions Aldi and even Wal-Mart in the same breath, but those two are competing for the same customers, and not the ones served by Whole Foods.  I'm beginning, in fact, to think of Amazon as the Fox News of retail.  It's probably more important than that, but the response to Megyn Kelly on NBC is proving that FoxNews is a big fish in a very small pond, and those who go to the big pond don't bring much with them.  I don't know what the sales comparisons are between Amazon and Wal-Mart, but I don't think Wal-Mart is sweating too hard.  Their customers don't require an internet connection and a credit card to make their purchases.  That's not a deadly limiting feature, but it is a defining one.  Especially since the people who buy food at Wal-Mart probably couldn't identify the location of a Whole Foods in their city.

The Slate article argues that Amazon is all about being the Wal-Mart of the internet:  cutting prices to undercut competitors and take over markets.  That is a self-limiting proposition in that Amazon will never really eat into Wal-Mart's customer base, though I'm sure that doesn't keep Jeff Bezos up at night.  But if Amazon decides to slash prices at Whole Foods, who is going to pour into that store to buy organic meat and flour?  I can already get that stuff at my popular local store, and I regularly buy organic ground bison (much better flavor and less fat) at Costco, where I can buy a lot of other organic foods (yes, Costco is self-limiting, too; but  7-Eleven is about the only place you can't easily buy organic food anymore).  Whole Foods works because it offers greater variety than Trader Joe's and because it offers an elite experience.  Paying more for Imperial Sugar there (and organic meat) proves you are a superior kind of person.  Destroy that experience in the name of going Amazon and you've just pissed away $14 billion.

Something tells me Jeff Bezos isn't that stupid.

I've read other, even more outlandish expectations from this purchase.  I confess I don't really care, because Whole Foods is not Safeway or Kroger, and there really isn't a national grocery chain that rules this country.  I remember that idea being bandied about a few years back, when Safeway and Kroger didn't seem to be doing so well.  There is a definite regional bias in grocery stores, and chains cannot really become national champions and rule from sea to shining sea.  400 stores nationally may sound like a lot, but Google tells me Kroger has over 2200, just ahead of Albertson's (heard of them?) at 2000.  Unless Bezos turns WF into Kroger or Albertson's, he's not likely to catch up with that number of stores anytime soon.  And if he does, will customers flee those stores to buy at Amazon's Whole Paycheck Discount Grocery where they have to be Amazon Prime members to buy things without whipping out cash or a check or even having staff in the story to check them out (I've actually seen this as an expectation of Bezos' plans)?  Probably not.*

What will happen?  Don't know, don't really care.  I barely shop on Amazon, and I don't shop at Whole Foods enough to make any difference to them (and if I had to stop, I'd barely notice).  What's funny about this kerfuffle is now elitist it is.  I mean, the people so concerned about it seem to be the people most afraid they'll be affected by it.

And despite what they think, they are not tout le monde; not by a long shot.

*Matt Yglesias gives us a nice, typical argument:

Of course the nightmare scenario for the supermarket industry is that acquiring Whole Foods does allow Amazon to fundamentally crack the grocery home-delivery game in a way that leads Kroger to go the way of Borders.

But the reason the takeover is such a disaster for the industry is that the financial implications are bleak even if Amazon doesn’t succeed in bringing incredible game-changing innovation to the sector. Introducing a player into the market that doesn’t care about profit margins is going to be devastating to competitors who have to.

They won’t necessarily be put out of business, but they will be forced to respond to lower prices and lower margins with lower prices and lower margins of their own — making the current round of dividend hikes extremely difficult to maintain. From the standpoint of an executive at a conventional business it must seem extraordinarily unfair. How is anyone supposed to compete and make money in an industry that features a major player who doesn’t actually try to make money? So far, history hasn’t shown us many examples of companies who’ve been able to pull it off.
This analysis is predicated on the idea that home delivery of groceries is going to take over the world, again (it was once a common practice when stores were smaller and closer to the homes they delivered to (i.e., non-suburban America).  Even then, deliveries were for the rich; everyone else walked to the store almost every day.  The store I shop at has opened a curbside pick up service; you purchase on-line and drive up later to get your car loaded.  It's popular, but only with people who think they are too busy (or important) to walk the aisles of the store.  You gotta remember, it costs extra, and extra means you can afford it, and they can; which is the whole appeal of Whole Paycheck.  The curbside service has probably increased store traffic, but it hasn't really made a dent in the crowds inside, and I doubt it ever will.  Again, the people this idea appeals to are the people who think Whole Foods is a major grocery store chain.  Google tells me my local preferred chain has 370 stores; which makes them no less significant than WF, but since they don't appeal to the elites on the internet (and aren't thinly spread across the nation, rather than concentrated in only part of Texas), if Bezos bought that chain everyone would just wonder what he was thinking.

As for the undercutting prices argument, as I said, once you do that, you're just another grocery store. Then what?

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