How Amazon-Whole Foods sale could impact NM’s grocery stores
News broke Friday that Amazon (Nasdaq: AMZN) has agreed to pay $42 per share in cash for Whole Foods (Nasdaq: WFM), or about $13.7 billion. Though Albuquerque grocers said it may be too soon to tell if the move means more or less customers for Whole Foods, they said they remain optimistic that the impact won't be negative.
"It's hard to say how we'll be impacted before anything is final, but La Montañita, and food co-ops across the country have faced this challenge for several years now, as Wal-Mart, Smiths & Albertson's and Costco & Sams have been increasing their footprint in the natural and organic food space," said Lea Quale, interim marketing and communications director for La Montañita Co-op Food Market, said.
La Montañita is New Mexico’s largest member-owned natural foods market.
"La Montañita Co-op has continued to grow through dramatic shifts in the natural foods industry since our founding in 1976, and we're confident that co-ops across the country will continue to be relevant in the future because of our deep commitment to building the community, supporting the growth of the farmers we work with, and improving the environment through the promotion of organic and regenerative agriculture practices," she said.
James Esqueda, who works with The Co-op Distribution Center for La Montañita added that even if Amazon buying Whole Foods ultimately makes the price of organic groceries cheaper, it also means more opportunity for the co-op's vendors. He said the Co-op Distribution Center already works with vendors to get their products that might not sell at the co-op to stores such as Whole Foods.
"The Co-op Distribution Center supports local vendors by delivering their products to other customers like Whole Foods even if the cooperative itself isn't able to sell the product," he said. "The reason we offer that service is to ensure we're strengthening the food hub. We're giving the option for these producers to ensure flow of food from whatever area it's grown and processed in."
Brian Gage, who brought a convenience store called Qbrik's to East Downtownearlier this year, said he personally couldn't be more excited about the news.
"I'm not a doom and gloomer. There is plenty of market share to go around," said Gage, who said he plans to start delivering groceries from Qbrik's to select ABQ zip codes later this summer, including 87110 and 87102.
Clayton King, a retail expert with NAI Maestas & Ward, said the impact of such a merger would not have a massive affect on local grocers.
"From a local level, I don't think you're going to see a massive impact," he said. "Whole Foods is still going to operate independently. It's going to offer more of a convenience for a consumer. Retailers are going to have to work harder to make that dollar."
King said retailers are working harder than ever to keep customers not only because of deals such as Amazon's, but because companies more and more are expected to offer both experience-based shopping along with convenience.
"We're living in a fascinating time when it comes to retail," he said. "You have a seismic shift in shopping patterns, in demographics, in spending dollars as it relates to millennials. Food was the one category that Amazon was struggling with. But with this acquisition, they're solving that issue. It's a brilliant move from Amazon's perspective," he said.
King said Albuquerque's grocery market is in a stable place right now, where there haven't been many seismic shifts in general.
"I wouldn't say we're oversupplied or underserved," he said. "We're well-supplied as it relates to grocery. Given our demographics, you're not going to see growth until we see more growth with households and jobs."
The deal comes on the heels of Amazon agreeing to collect gross receipts tax on New Mexico purchases. In March, the Albuquerque Journal reported the online retail giant had previously avoided paying taxes in New Mexico, where it did not have a brick and mortar location.
Whole Foods has two Albuquerque locations and recently closed one of its Santa Fe locations, according to the Santa Fe New Mexican.By: Rachel Spain, Reporter - Albuquerque Business First