Amazon’s $13.7 billion acquisition of Whole Foods has understandably sent shockwaves down the aisles of the U.S. supermarket industry.
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Amazon is a master merchant that accounts for a remarkable 40% of all online retail sales in America. Even if bricks-and-mortar stores still account for the lion’s share of shopping, their future looks dim.
So now the combination of Amazon’s deep pockets, its seeming indifference to the cost of testing out new ideas, and its technological prowess are going to be applied to the supermarket business, which has largely stood aloof from the e-commerce onslaught. That is mainly because the logistics of getting a wide assortment of products with different requirements – some fresh, some frozen, some refrigerated and some fragile – present much trickier logistics than delivering a smartphone or a shirt.
But those problems are gradually being solved, and FMI-Nielsen predicts that online sales could capture a fifth of food sales by 2025.
Amazon, of course, is not going to let others take that business. It is determined to find the best model for overcoming the logistical problems. No one knows how Whole Foods will fit into this, but one element will surely be using its 430 supermarkets as the basis for a nationwide system for ordering food online and picking it up at a nearby store.
Driving a gas-guzzler to the ecological store
Beyond the business implications of the Amazon-Whole Foods deal, there are environmental ones as well.
Whole Foods made its name as the place to buy fresh produce and prepared foods deemed “natural,” that is minimally processed foods free of hydrogenated fats, artificial flavors, colors, sweeteners, preservatives and the like.
How natural anything that comes in a box or a can is capable of being is debatable` and driving your SUV to a big air conditioned supermarket full of refrigerators and freezers and out-of-season produce flown in from distant lands creates an elephant-sized carbon footprint that probably undoes whatever benefits the earth and your health enjoy from organic arugula. But give credit to Whole Foods for at least going in the right direction.
The problem is that all comes at a price: Eating organic carrots or munching a non-GMO potato chip is expensive.
Except for the elite who can afford Whole Foods’ fresh fish at $45 a pound, the rest shop at Kroger, Costco and Walmart, where you buy Kraft Macaroni and Cheese, Mega Stuf Oreos and other products that will lead to an environmental and digestive apocalypse, but at least leave you some money to pay the rent.
Organic caviar and Velveeta?
Before it was rescued by Amazon, Whole Foods was running into resistance even from its shoppers over its prices, and sales have been stagnant. The fact is, only a small number of consumers can afford to pay extra for organic luxuries and many who can afford it want to be able to snack on Velveeta processed cheese too, an option Whole Foods doesn’t offer.
Meanwhile, Costco and the others have begun offering their own organic products at lower prices, which gives these shoppers the best of both worlds. But the lower prices are made possible by sacrificing the standards that Whole Foods holds to. The “organic” salmon steaks at Costco may be factory farmed.
It seems more likely than not that Whole Foods’ natural offerings will become less natural over time. Amazon, its new mistress, is a mass marketer that focuses on low prices and fast delivery. It does that mainly through technology, which can save it labor costs and rent, but buying products to fill the shelves is a supermarket’s main expense and Amazon will have to attack that as well by being a little less organic.
A little less organic
And here is the moral of the story: The planet really is at risk from environmental degradation that will entail major changes in the way we live.
The myth is that it can somehow be done at little or no cost, and whatever costs there are can be absorbed by others, namely big corporations.
Better technology can help overcome some of these costs. But it would be nave to think it can solve all of them, certainly in the timeframe being dictated by climate change.
In that respect, even if the climate change deniers have the science wrong, they have the risks right. That explains why the issue of climate change has, to a degree, become the object of class warfare.
For the miner, reducing the use of coal will put him out of a job and doesn’t guarantee him another. Climate denial is what Trump wants to hear, not because he has any scientific insights but because he has a fundamental economic interest.
For the Whole Foods shopper, well, he doesn’t burn coal himself and probably has no idea what fuel his local utility uses. He would be happy to log on to change.org and sign a petition urging it to use natural gas (hey, it’s natural), or wind, and wouldn’t object to a gentle rise in his electrical bill to pay for it. But give up the second family car, frequent air travel, the air conditioned McMansion?