Whole Foods founder John Mackey has praised Amazon founder Jeff Bezos for his strategy, which will make the supermarket chain even more successful. He also calls him a ‘retail genius’. This is what happened.
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Before Bezos and Amazon acquired the company in 2017, the Whole Foods supermarket chain was struggling financially. The rise of competition made it increasingly difficult for the company to compete profitably. Whole Foods was founded in 1980 by John Mackey with a small staff of 19 employees. Whole Foods revolutionized the grocery industry by offering consumers organic and natural foods. The chain was known for its high prices, and despite Mackey’s efforts, affordability issues and increased competition caused Whole Foods’ stock to fall nearly 40% in 2006. With the rise of supermarket chains like Safeway and Kroger that stocked organic food at much lower prices, Whole Foods ran into trouble. Investors retreated and sold shares, and the company’s management saw several changes in new board members.
According to Jon Springer, editor of the trade magazine Winsight Grocery Business, the problem with Whole Foods was that “consumers no longer had to go to Whole Foods to get what you could find at Whole Foods.” Amazon’s purchase of the organic grocery chain was Whole Foods’ salvation, as Mackey has put it.
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Amazon bought the supermarket chain for a whopping $13.7 billion in 2017, marking the online e-commerce giant’s entry into the grocery industry. Many people at the time were concerned about what this meant for other supermarket chains. Springer revealed that the sale of Whole Foods felt like a blow to the industry. “The stock of all the conventional supermarkets and the Walmarts of the world has just been devastated by this one announcement.”
This acquisition also brought some positive changes to the company. Mackey has admitted that it is only thanks to Bezos that Whole Foods prices have become more accessible to consumers. In an interview with Fortune, Mackey revealed, “Amazon made us cut our prices four times.” Mackey added, “Jeff is a brilliant man; he’s a genius. What I like most about Jeff, besides being creative and entrepreneurial, is that he thinks very long-term.”
This move to lower Whole Foods prices couldn’t have come at a better time as the country struggles with high inflation, which has caused food prices to rise 21% since January 2021.
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In addition to helping the company attract more consumers shopping on a budget, Bezos gave employees a raise and helped shed the supermarket chain’s reputation as a “whole check” store due to its previous high prices. Mackey gratefully explains, “I hardly ever hear the ‘whole paycheck’ story anymore – it’s because of Amazon.”
Amazon did this by cutting prices, which hurt revenues in the short term but paid off in the long term. By offering savings to Prime members and hosting Prime Day discounts, consumers could save up to 50% on select items.
Despite all the changes the e-commerce giant has made, including a new CEO, Jason Buechel, Mackey has emphasized that Amazon has never tried to impose its culture on the grocery chain. “They weren’t trying to change Whole Foods,” despite this being common in the business world. Amazon still has bigger plans for Whole Foods, as Buechel revealed at a Milken Institute Global Conference in May that they plan to open about 30 stores per year and have already opened 60 new locations.
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This article From ‘Whole Paycheck’ to a Brand New Strategy: Whole Foods Founder Hailes Bezos as ‘Retail Genius’ originally appeared on Benzinga.com
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