In the organic-foods market, Whole Foods was already a Goliath. When Amazon bought Whole Foods in August 2017 for $13.7 billion, that Goliath ballooned into a gargantuan threat to other grocers. The combined company had nearly 560,000 employees at the end of 2017 and revenue of almost $180 billion.
Whole Foods Market has about 10 stores throughout the North Bay.
On Feb. 8, Amazon announced two-hour free delivery from Whole Foods stores to Prime Now members in Dallas, Austin, Cincinnati and Virginia Beach. Items from the Whole Foods 365 brand can now be ordered on Amazon’s website.
Prime members enjoyed pruned rose prices for Valentine’s Day — $19.99 for two dozen at Whole Foods. Regular customers paid $5 more.
Since the acquisition, Whole Foods aims to broaden its customer base by trimming prices, competing with Trader Joe’s, Safeway and Raley’s. Conventional produce has become more prominent at Whole Foods, though organic fruits and veggies remain. Prices eased for Fage yogurt, avocados and prepared food.
In larger North Bay Whole Foods stores — San Rafael and Napa — Amazon placed lockers so online shoppers can order merchandise of all kinds then pick it up at Whole Foods. Pop-up Amazon deals sprouted at Whole Foods stores over the holidays.
Amazon-muscled Whole Foods may hurt organic-food grocers in the North Bay. But some see the bulked-up behemoth ceding market space in which Whole Foods had formerly been a tough competitor. Amazon-Whole Foods may pull more customers away from food-store chains than from dedicated organic grocers such as Good Earth in Mill Valley and Fairfax, and Community Market in Santa Rosa and Sebastopol.
North Bay Business Journal reached out to Whole Foods for comment. “We aren’t participating in interview requests,” said Erika Dimmler, public-relations representative for Whole Foods in Northern California.
In a Feb. 1 earnings call about Amazon’s fourth quarter, Amazon CFO Brian Olsavsky said, “We’re ... very excited about opportunities we have to innovate with the Whole Foods and Amazon teams together.” Store revenue in the fourth quarter, mostly from Whole Foods, was about $4.5 billion.
“Our focus has been on continuing to lower prices even beyond the initial ones we discussed at the close of the deal,” Olsavsky said. “We’ve also added lockers, and have much more to come.”
“Amazon is actually decreasing pressure on a store like ours,” said Stephen Mitchell, managing partner and general manager at Good Earth Natural Foods, which in 2016 opened a new store in Mill Valley, with population of about 15,000. Mitchell, one of three owners, joined in 2011.
Good Earth, founded in 1969 as a small Fairfax store, refurbished an Albertson’s in Fairfax and expanded in 2012. That store draws some 3,400 customers a day with nearly $40 million in annual sales, Mitchell said, already “pushing capacity.” Whole Foods has no store in Fairfax, which has population of about 9,000 and about twice that with surrounding communities.
There are two Whole Foods stores in Mill Valley. The first on Miller Avenue was doing about $20 million a year in business when Good Earth opened, Mitchell estimated. “They dropped down to about half of that,” he said, with traffic going to his store, projected to hit $28 million in 2018 sales. Limited parking will curtail the store’s further growth to about $36 million, he said.