Published on: February 23, 2022
Yesterday we linked to a CNBC story speculating that Amazon's grocery business has turned into an "expensive hobby," as it has tried a number of different strategies and tactics without achieving the dominance that it has reached in other segments.
I commented, in part:
I do think that it is important for investors, analysts and retailer competitors to remember that Amazon's greatest superpower may be its market capitalization, which is so far beyond that of most companies that it can afford to try a lot of different approaches as it seeks the right balance. The story makes the point that Amazon Go stores are being de-emphasized in favor of the Amazon Fresh brand, but learnings from the Go concept almost certainly are informing many of the decisions being made with the Fresh stores. (Keep in mind that Amazon's smartphone venture was a failure, but it learned things from the experience that found their way into its Alexa business, which has been an enormous success by any measure.)
I'm not wildly impressed by the Fresh store format, but I also think that it is entirely possible that Amazon is viewing the concept as being a distribution center/dark store that happens to allow customers in … a perception that seems to be reinforced by the numb er of people I know who, going into a Fresh store, find that they are vastly outnumbered by employees who are assembling orders for pick-up or delivery.
This prompted MNB reader Thomas Parkinson to write:
I think we should be cautious about that article declaring grocery is an expensive hobby for Amazon. This all comes down to the definition of "grocery". Is HBA grocery? Diapers? Baby formula? Is everything sold in a grocery store "grocery"? From my own personal experience, I purchase many non-food items on Amazon that I can get at a grocery store. I think their national shipping business is probably not included in the estimate. I have no proof, just a hunch.
Excellent point. I share your hunch.
We also had a story yesterday about a new Whole Foods flagship store in San Francisco, about which I commented:
It is all well and good to open a flagship store ands beat your chest about it. But I think it is fair to say that there is a strong perception in the industry and around the country that many Whole Foods stores have lost a step or two over the years.
Now, there are a lot of potential reasons for this, and you can choose one or more:
Time takes an inevitable toll. Amazon's ownership has diluted the chain's commitment to core values. Covid-related stresses. Labor shortages. Supply chain issues. And I'm probably missing a few.
The thing is, most Whole Foods customers have no idea that this San Francisco flagship even exists. They only know their store, and whether it is meeting their needs or somehow lacking in how it delivers on the brand's value proposition.
I do know this. in a lot of places, for a long time, Whole Foods was a respected and even feared competitor, but that doesn't seem to be the case anymore. I think this is a situation that ownership has to address.
MNB reader Kathleen Ottaviano responded:
Couldn't agree more with your statement that Whole Foods has lost a step or two. I used to love shopping there. Not anymore. Granted, the store I shop at is on the small side, but along with less variety in the selection, the notion of good customer service has ceased to exist. Once when searching for shallots, I was told there was a 'crop failure'. Funny - the Safeway down the street had plenty in stock. The wait to check-out is always long, no matter the time of day. (No self-checkout at my location).
But the most annoying thing is the clerk asking me if I'm a prime member. When did Bezos buy Whole Foods? Was it in 2017? Can't they figure out a way to automate the whole Prime membership question in 5 years? Maybe if they knew someone in tech.....
I never get asked that at Whole Foods, but that's probably because I am always quick to offer the Prime app on my smartphone for scanning. Doesn't really bother me when I hear them ask other folks, but apparently it does become bothersome.
Another MNB reader wrote:
On the WFM new flagship in San Francisco, I can’t agree more that they have lost a few steps over the past years. I know this from the inside since I worked for WFM from 1998 until 2016 in the NE region, growing it from 4 Fresh Fields stores to over 45 Whole Foods. I had overseen the Prepared Foods program for most of the time and was very proud of what we created. Now when I walk into WFM stores their fresh selections in prep foods, bakery and other perishables has fallen down … I don’t want to be associated with how they operate now.
Yesterday we took note of a New York Times report that Family Dollar had to temporarily close "more than 400 stores after the discovery of a rodent infestation and other unsanitary conditions at a distribution center in Arkansas touched off a far-reaching recall of food, dietary supplements, cosmetics and other products.
"A recent Food and Drug Administration inspection of the facility, in West Memphis, Arkansas, found live and dead rodents 'in various states of decay,' rodent droppings, evidence of gnawing and nesting, and products stored in conditions that did not protect against these unsanitary conditions, the agency said in a statement Friday.
"A fumigation of the facility last month revealed more than 1,100 dead rodents, and a review of company records indicated the collection of more than 2,300 rodents from late March to September, 'demonstrating a history of infestation,' the agency said. Rodent contamination can cause salmonella and infectious diseases, the FDA said."
Lots of email on this one.
One MNB reader wrote:
Not surprised at all given store conditions generally in the ones I visit. Wouldn't be surprised if it happened at Dollar General as well at some point.
From another reader:
No one has been fired or taken to the woodshed??????
Not yet. Not to my knowledge.
From yet another reader:
Ya gotta hope they are checking out other DollarTree facilities since this appears to be a management/cultural issue! Cutting costs, to operate at the level they do, potentially risks "unintended consequences" and "collateral damages".
Yup. Gotta hope.
And then, the funniest email of the day from MNB reader Bob Thomas:
See the havoc that cheese addicts can cause?