August 24, 2017 Last Updated 8:13 am

Amazon to close Whole Foods deal Monday, a decade or so ago that would have been bad news for newspaper executives

Along with classified advertising, one of the most lucrative revenue generators for newspapers in the past was the weekday food section, but those food dollars left newspapers years ago, which is why this merger has not met with much resistance from newspaper publishers

The news that Amazon will close its deal to acquire Whole Foods this coming Monday is cause for celebration for those looking for discounted organic avocados and large brown eggs (see press release below). But one of the positions in the newspaper industry I held for a few years was that of Director of Food Advertising, and I can tell you that if such a deal had taken place back when I was in the food ad business I would have been frightened out of my mind.

The reason, of course, is that when I was in food advertising at a Hearst newspaper, a significant amount of retail ad dollars flowed through my department, though not nearly as many dollars as swallowed up by our competitor, the Los Angeles Times. Their food section as really “sections” — at least two sections every week, sometimes three, and before holidays four. The major chains such as Ralphs and Vons would buy 16 pages or more of advertising every Wednesday (or was it Thursday, it has been a few years), while we were lucky to get a couple.

Whole FoodsBut newspapers, in general, have lost the grocery business to direct mail, customer loyalty cards, and such.

The grocery business has certainly changed tremendously in the past decade or so. But it has come in stops and starts.

For instance, many believed that services like Peapod would come to dominate food shopping but that company has seen its business grow like the shape of a heart monitor screen. Still, the idea of grocery deliver, or shopping online and picking up in-store, is growing.

At a local store, one sees shopping cards lined-up in mid-aisle filled with grocery bags filled by staff, and waiting to be picked up by customers that did their shopping online with the idea of picking the groceries up after work.

Food brand advertisers that used to spend all their ad budgets on TV advertising and co-op dollars for grocery chains, now advertise online, sometimes on the websites of the grocers themselves — MyWebGrocer is one of the companies that sells this type of digital advertising.

Newspapers, as they did with classified advertising, did not react when the grocers started to cutback and their food sections shriveled up and went away. Yes, some money went into inserts and other programs, but newspapers generally failed to build local digital products that could keep those grocery dollars in-house.

It looks like Amazon is about to use an old fashioned strategy to upset the grocery business: undercutting the competition.

“Starting Monday, Whole Foods Market will offer lower prices on a selection of best-selling staples across its stores, with much more to come,” Amazon said in its announcement. “Customers will enjoy lower prices on products like Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken, 365 Everyday Value organic butter, and much more.”

If the big grocery chains want to know what this looks like, ask Borders and Barnes & Noble. Amazon is not looking to build up the margins and profits at Whole Foods, it will sacrifice profits for marketshare just as it did in the book business, and elsewhere.

Here is the announcement from Amazon on closing the Whole Foods deal:


SEATTLE & AUSTIN, Texas — August 24, 2017 —  Amazon and Whole Foods Market today announced that Amazon’s acquisition of Whole Foods Market will close on Monday August 28, 2017, and the two companies will together pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone. As a down payment on that vision, Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come.

In addition, Amazon and Whole Foods Market technology teams will begin to integrate Amazon Prime into the Whole Foods Market point-of-sale system, and when this work is complete, Prime members will receive special savings and in-store benefits. The two companies will invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers.

“We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” said Jeff Wilke, CEO of AmazonWorldwide Consumer. “To get started, we’re going to lower prices beginning Monday on a selection of best-selling grocery staples, including Whole Trade organic bananas, responsibly-farmed salmon, organic large brown eggs, animal-welfare-rated 85% lean ground beef, and more. And this is just the beginning – we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together. There is significant work and opportunity ahead, and we’re thrilled to get started.”

“It’s been our mission for 39 years at Whole Foods Market to bring the highest quality food to our customers,” said John Mackey, Whole Foods Market co-founder and CEO. “By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market’s high-quality, natural and organic food. As part of our commitment to quality, we’ll continue to expand our efforts to support and promote local products and suppliers. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”

Here’s what will be new in Whole Foods Market stores on Monday and what customers can expect over time as the two companies integrate:

  • Starting Monday, Whole Foods Market will offer lower prices on a selection of best-selling staples across its stores, with much more to come. Customers will enjoy lower prices on products like Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken, 365 Everyday Value organic butter, and much more.
  • In the future, after certain technical integration work is complete, Amazon Prime will become Whole Foods Market’s customer rewards program, providing Prime members with special savings and other in-store benefits.
  • Whole Foods Market’s healthy and high-quality private label products—including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch—will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now.
  • Amazon Lockers will be available in select Whole Foods Market stores. Customers can have products shipped from Amazon.com to their local Whole Foods Market store for pick up or send returns back to Amazon during a trip to the store.

This is just the beginning – Amazon and Whole Foods Market plan to offer more in-store benefits and lower prices for customers over time as the two companies integrate logistics and point-of-sale and merchandising systems.

Whole Foods Market will continue to grow its team and create jobs in local communities as it opens new stores, hires new team members, and expands its support of local farmers and artisans. The company will maintain operations under the Whole Foods Market brand, preserve its high standards and commitment to providing the finest natural and organic foods, and continue to source from trusted vendors and partners around the world. John Mackey will remain as CEO and Whole Foods Market’s headquarters will stay in Austin, Texas.

Comments are closed.