In this file:
· Whole Foods calls meeting with key vendors as tensions flare
· The Amazon Effect On Consumers And Grocery Shopping
· Amazon’s Expanding Grocery Delivery Is Opening Salvo: Report
· Worried about your Amazon package sitting outside all day? Whole Foods has an answer
· Online Butchers Cater to Meat Lovers in the Age of Amazon
· Amazon's attempt to land major Pentagon job stokes antitrust fears
Whole Foods calls meeting with key vendors as tensions flare
Tensions between Whole Foods Market and some of the most important brands it sells in its stores will come to head on March 19.
The grocer notified certain vendors about the meeting last Saturday.
A key issue discussed will be Whole Foods' efforts to centralize its merchandising.
Lauren Hirsch, CNBC
Mar 11, 2018
Tensions between Whole Foods Market and some of the most important brands it sells in its stores will come to a head on March 19, when they will congregate for a recently announced summit, sources familiar with the situation tell CNBC.
The grocer notified certain vendors about the meeting by email last Saturday. It is set to reassure the brands of relations after Whole Foods' sale to Amazon. It comes after a rocky few months for the grocer, which has been trying to shift from a local orientation to a national one, without sacrificing the selection and relations that set it apart from larger peers like Kroger and Albertsons.
Some of those efforts, like its move to centralize purchases, preceded its sale to Amazon. However, any change the grocer makes is drawing more scrutiny amid the uncertainty following Amazon's acquisition.
Meantime, Whole Foods' limited communication about the status of these changes has been a point of frustration, according to multiple vendors that spoke to CNBC.
A major point of debate for its larger vendors is the new servicing fee, proposed in the last few months, which will charge vendors for Whole Foods' efforts to centralize its merchandising, sources said. Still, some of the sources noted their reliance on Whole Foods as a customer gives them little power with which to bargain.
Traditionally, with both Whole Foods and most grocers, food companies could pay brokers to help manage everything that happens from the grocery stock room to the shelves. The distance from the back room to shelves has been called some of the most expensive mileage on the planet.
These brokers fulfill a number of functions, but their key role is to make sure products are displayed well and taken care of. That could mean anything from making sure there are more granola bars on the shelf when those bars are on sale, keeping the freshest yogurt on the top of rack, or strategically hiding under-stocked goods. Brokers can also use the relationships they wield to make their case for more shelf-space.
Now, Whole Foods wants to control that process, and will charge some companies roughly 3 to 5 percent of sales for the service. The shift was first reported by the Washington Post.
Vendors are not happy...
Broader Changes ...
The Amazon Effect On Consumers And Grocery Shopping
By Karen Webster, PYMNTS.com
March 12, 2018
If you’re like most Americans, you or someone in your household made a run to the grocery store on Saturday to get food for the week.
If you lived in the Northeast, you were also there to stock up on the three things that everyone always buys when big snowstorms are expected — our third big storm in as many weeks (for those of you not keeping score like we are here in Boston).
Like most grocery shoppers, you already knew most of the things you were going to buy before you even got there — roughly 75 percent of grocery shoppers do. Although your favorite grocery store probably has a loyalty program and offers digital coupons, that probably isn’t why you like shopping at that store. In fact, fewer than 20 percent of all grocery shoppers say they chose a grocery store for that reason.
Like most consumers, your favorite store is probably your favorite because it’s easy and convenient to get to, has good prices and is where you’ve always shopped — a sentiment that nearly 90 percent of all grocery shopping consumers in the U.S. share.
As for using a mobile app before and during that trip?
That depends on where you shop and whether your top pick is a big store — Walmart, Target, Albertsons, Kroger, Whole Foods — or a Bi-Rite, JustSave, Luckys Market, Town & Country Market or one of the thousands of smaller format stores that dot the grocery landscape in the U.S. and often don’t even have an app.
About three in 10 grocery shoppers use a store’s mobile app as part of their grocery shopping process to check prices and see what’s on sale if they shop in a big store — only one in 10 do so if their go-to is a smaller store.
Whether you might have used the app to pay for your order depends on whether you went to the store to shop and to pay — or just to pick up what you ordered earlier online — and what you value most from your favorite store.
All those data points — and the insights they yield — are just some of things we learned when we, in collaboration with Vantiv, now Worldpay, asked about 4,000 consumers how they shop and pay for groceries today and how well their favorite grocers are doing to support the features they value most when shopping with them.
The short answer is: not all that well...
The Big Spend ...
The Dash to Capture Grocery ...
Hitting a Fever Pitch ...
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Amazon’s Expanding Grocery Delivery Is Opening Salvo: Report
By Jon Swartz, Barron's
March 9, 2018
Shares of Amazon.com (AMZN) are up 1%, to $1,569.70, on an Evercore ISI report this morning. The firm raised its price target on the e-tail giant to $1,745 after it said it was expanding free grocery delivery to Atlanta and San Francisco. Amazon launched the service last month in four cities: Dallas, Austin, Cincinnati, and Virginia Beach, Va.
"The pace at which this [delivery] service is expanding speaks to the success of the initial tests and is simply the opening salvo in Amazon's long-term goal of turning Whole Foods' footprint into effective e-commerce delivery points, a task that AMZN is uniquely qualified for," Anthony DiClemente said in a note.
Amazon's $13 billion acquisition of Whole Foods Market has not only perfectly aligned the two companies' core competencies but revamped the grocery e-commerce market, says Evercore, which calls the Amazon-Whole Foods tandem "a match made in grocery delivery heaven."
Whole Foods' customer base and store footprint parallel Amazon Prime subscribers...
Worried about your Amazon package sitting outside all day? Whole Foods has an answer
By John Sowell, Idaho Statesman
March 09, 2018
Six months after it bought Whole Foods, Amazon says it has quietly rolled out its secure package delivery system, Amazon Locker, to all Whole Foods stores, including Boise’s.
The Boise store, at 401 S. Broadway Ave., now has a bank of orange lockers next to bins filled with apples, oranges and other fruits and vegetables. Amazon customers can add the locker location to their online address books and have their purchases sent there instead of their homes.
A Statesman reporter had a purchase delivered to a locker Thursday. Shortly after noon, the reporter received a text message and an email saying the package was ready for pickup. Both messages provided a six-digit code to punch in on a touchscreen at the bank of lockers. The email included a barcode for scanning instead.
Without a sound, a compartment door opened to reveal the reporter’s package. The process was quick and easy. No help from a Whole Foods worker was needed.
Although many retailers allow online customers to have products shipped to local stores, Amazon is the only one to offer secure lockers that do not require a store employee to hand over the merchandise. The lockers can also be used for Amazon returns...
Online Butchers Cater to Meat Lovers in the Age of Amazon
Porter Road, Crowd Cow and Greensbury Market are tapping a growing appetite for sustainably raised steaks and more.
By Craig Giammona and Jing Cao, Bloomberg
March 12, 2018
For the last seven years Porter Road has carved out a profitable niche selling small-batch meat to discerning shoppers in Nashville, Tennessee. Keen to start peddling its prime cuts of beef, pork and lamb to the rest of the country, the butcher opened an online store last month.
Porter Road and an expanding list of upstarts are tapping into growing demand for meat that’s sustainably raised on family farms even as Americans open their minds and wallets to buying fresh food online. While a tiny part of the almost $55 billion U.S. meat industry, these companies are providing an alternative—albeit a pricey one—to the mass-produced steak, pork and chicken sold by giant agribusinesses like Perdue and Tyson.
“What we're trying to do is bring fresh meat delivery service into the 21st century," says Porter Road co-founder James Peisker.
Delivering meat to people’s homes is not a new idea. Omaha Steaks, founded about a century ago in the namesake Nebraskan city, started a mail order business in 1953—shipping its meat in wax-lined boxes filled with dry ice. Today the closely held, family-run company has an online store but emphasizes quality, price and free shipping—not the provenance of its meat.
Upstarts like Porter Road, Greensbury Market, ButcherBox and Crowd Cow are all about where the food comes from, how it’s raised and where it’s slaughtered. Their philosophy echoes an ethos long espoused by Whole Foods and now creeping into mainstream grocers. It started in the produce aisle with organic fruits and vegetables and has spread to meat and fish. Consumers are particularly enamored of grass-fed beef, annual sales of which have exploded more than 2,000 percent in the last five years to almost $360 million, according to Nielsen.
“Technology allows these companies to go after that leading-edge consumer, it’s a perfect marriage,” says Carl Jorgensen, director of wellness strategy at Daymon Worldwide, a retail marketing firm. “There’s a group of people who don’t think organic is enough; they’re getting fussier about what they’re eating.”
Porter Road is like many of the specialty butcher shops that have opened in recent years—with a key difference: it processes the animals in-house, rather than outsourcing the job. Workers at a slaughterhouse in Kentucky employ traditional methods and use the entire animal, selling the bits consumers don't typically want to wholesale operations and other companies. Porter Road also does its own packaging and fulfillment, so it's the only entity touching the meat between the farm and the customer. The packaging insulation is corn-based and dissolves in water.
The butcher, which sells a $100 starter pack containing dry aged steaks, pork chops, ground beef, bacon, country sausage and chorizo, says it generates average margins of about 40 percent on each box of meat—including the cost of the animal, packaging, labor and shipping. Porter Road says its farmers earn more because there are no middlemen. The company raised $1.5 million in July from venture capital investors.
Looming over Porter Road and other online butchers is Amazon.com Inc. The e-commerce giant sent a shudder through the entire grocery industry when it acquired Whole Foods last year, accelerating its own push into fresh food delivery. Greensbury Market, a New York purveyor of premium meats that opened its online store about 10 years ago, was trying to raise money from investors when the deal hit.
“We had some investors who very directly said that if Amazon goes into your market, they’ll put you out of business,” says Ted Hopper, Greensbury Market’s chief executive officer. “I think that’s a lazy perspective. There are people who don’t want to buy everything on Amazon.” Hopper says sales surged more than 50 percent in 2017, in part because customers are losing trust in Whole Foods’ ballyhooed quality standards in the aftermath of the Amazon takeover...
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Amazon's attempt to land major Pentagon job stokes antitrust fears
By Ali Breland, The Hill
Antitrust critics fear that a winner-take-all contract for the Defense Department’s cloud computing needs could help tech giant Amazon corner the government contract market even further.
The winner of the contract, which the DOD updated its position on last week, in its current form would give its winner control over serving the Pentagon’s cloud computing system as it switches over from an older IT system. The agency predicts that the contract will be worth billions.
Amazon competitors like IBM and Microsoft have been pushing for a multi-party contract that would split cloud-computing services between several companies. They argue that leaving the contract in the hands of a single provider unnecessarily increases cybersecurity risks.
“It’s certainly an indication that Amazon has enormous political power,” said Stacy Mitchell of the Institute for Local Self-Reliance, a research group that advocates for local businesses and tracks Amazon’s movements in government. “They have translated their corporate power and wealth into political power.”
“The fact that the process was accelerated and opaque and that other bidders didn’t have the opportunity to get involved and bid on it — it seems to be an indication that Amazon has an inside track to a competitive bidding process,” she argued.
Matt Stoller, an economist at the Open Markets Institute who has become a vocal critic of Amazon’s market power, said that Amazon landing the sole-source contract could have wide-ranging negative effects.
“This is a monopoly story but this is a really serious national security story,” Stoller said.
“A single-source provider for Pentagon cloud services is obviously reckless. The Pentagon should clearly have multiple cloud providers so that if something happens to one of them there is resiliency and redundancy.”
Companies frustrated by what they see as procurement bias towards Amazon have also slammed the decision.
IBM called the move “flawed,” while Microsoft said it was “disappointed."
The tech companies have voiced their frustration through...