Dive Brief:
- Whole Foods CEO John Mackey said last week that Amazon’s acquisition of his company freed it from the “trap” of its high-price image, according to Food Business News. Speaking at the SNAC International Executive Leadership Forum last week, Mackey noted: “Amazon has a different narrative. Now we’ve embraced its narrative and so ‘whole paycheck’ disappeared. We escaped the trap.”
- Mackey also said he’s been amused by the speculation surrounding the acquisition: “When we announced the deal, the press release was less than one page, and no one from Amazon and no one from Whole Foods ever talked to the media. Everything you read was from journalists, other experts and pundits, and analysts just making stuff up.”
- When asked about the companies’ future plans, Mackey declined to provide details, only saying that the initiatives would be very “customer centric.”
Dive Insight:
Many industry observers would beg to differ with Mackey’s claim that Whole Foods has escaped its “Whole Paycheck” image. Although Amazon lowered prices on a collection of products to celebrate its new acquisition, subsequent research revealed that the changes were more about marketing a lower price image than actually lowering prices.
What really matters, though, is what comes next — a sentiment that Whole Foods and Amazon would no doubt agree with, judging by the signage that appears throughout stores. Many seem to agree that Amazon will, in fact, bring average prices down at Whole Foods. But can Amazon bring down prices by as much as 15% — the markup that most analysts agree Whole Foods has over conventional grocers?
The recent news that Whole Foods is further centralizing its buying operations indicates that Amazon is serious about reining in the grocer’s operating costs, which are some of the highest in the business. Amazon will likely continue to look for efficiency measures, including updating systems and even renegotiating supplier contracts.
During his discussion, Mackey once again revived the talk of the merger between his supermarket and Amazon as a “marriage.” The two companies, he said, are in the early stage of their union, and are still figuring out how to work together. He offered a few other lofty analogies to describe their operations to date, including composing a symphony and writing a novel.
The maverick CEO has always succeeded at drawing attention to himself. Earlier this year, in an interview with Texas Monthly, he called activist investor Jana Partners, which had purchased a 9% stake in the troubled company, “greedy bastards.” At times, Mackey has courted controversy, like a decade ago when he was caught promoting Whole Foods and disparaging rival Wild Oats on an online message board under the pseudonym “Rahodeb” (a riff on his wife, Deborah’s, name).
Before Amazon’s acquisition, many observers speculated that Mackey’s ouster from the company was imminent. The tech giant has chosen to keep him in the executive seat, no doubt valuing his vision and understanding of the Whole Foods brand. But Mackey’s and penchant for mischief and for talking off the cuff could result in unnecessary distractions for both companies.
