Why I’m Looking Forward To Amazon Owning Whole Foods

PoP water levels after this crazy rain: This tree near the edge of our property (on the neighbor's lot) is usually a good 6 feet + away from the lake's edge, not submerged a solid 6" (or more?) in water.

PoP water levels after this crazy rain: This tree near the edge of our property (on the neighbor’s lot) is usually a good 6 feet + away from the lake’s edge, not submerged a solid 6″ (or more?) in water.

Before I type anything about something as trivial as groceries, I have to stop and hold those in Texas in my thoughts.  I hope you are all safe and stay that way.  

According to local public rain gauge data, upwards of 9″ and 10″ of rain has fallen at the nearest (to us in FL!) rain gauges to us over the last 4 days (through Saturday), and that doesn’t include the fact that it has been raining mostly non-stop all of Sunday (so far).  The lake behind our house was at a height on Saturday that we have never witnessed in the 8 years we’ve lived here (still well below our home’s elevation, so please don’t worry about us), and I’ve been hunkered down in the house, even a bit scared to go out driving on the roads.  

Viewing this here, I can’t even wrap my mind around what it has been like to have that quantity of rain fall that Houston and other nearby areas have received in far less time that that.  I am scared for you.  Please, take care!  

 

Today, Amazon will close on its $13.7 billion dollar purchase of Whole Foods.  Honestly, I’m a little surprised the FTC gave it the go-ahead.  But I am actually looking forward to it, and even more so after Jeff Bezos announced that the first thing that will happen post merger is for prices to decrease on key staples throughout the store on Monday morning.

Image from TechCrunch

I only shop at Whole Foods maybe once a month, and only buy a (literal) handful of items when I go (as I noted when I wrote about our food spending rules of thumb almost exactly three years ago).  Nonetheless, I’m hoping that these price reductions (and hopefully other supply chain innovation) will bring the prices of high quality food down from the heights that they have risen to over the past few years (and especially over the last year!).  Specifically, at the chain where we do the vast majority of our grocery spending, Publix.

You see, our grocery spending has been going up over the past few years…. and (sneak preview), this month will not be an outlier in that trend given that we were already over the grocery budget before I went shopping this morning (the first time I had been out of the house since Thursday – darn you rain!).

dyerware.com


At the time of that post, our grocery budget had been $350 for years and we weren’t having much trouble hitting it.  But since then I’ve had to increase it to $400, and even then we’re having trouble hitting that number more often than not lately.  I’ve attributed different things to the increases in my mind over time…

  • At first it was ongoing construction at our house leading to convenience food purchase, which definitely was the case in 2015, but hasn’t really been since.
  • Then I started thinking that we’ve been cutting our use of processed foods and relying less on some of the less expensive (or even zero) grains even when cutting processed foods.
  • Occasionally I’ve blamed the spending on carelessness and not being budget conscious or looking at prices on every item – but that’s much less the case as I’ve been paying a lot of attention lately as it gets harder and harder to meet our increased grocery budget.
  • And I have blamed part of it on buying a higher proportion of our household cleaning and personal care supplies at Publix (groceries) instead of Target (shopping) – which is true to some extent,

but that still doesn’t account for the number of times that I have groaned to myself (and even once to the Publix store manager!) for Publix replacing lower cost products with higher ones, raising prices throughout the store (especially in the produce department), and having sales that aren’t as deep as they used to be.  For example:

Publix used to have (for me) THE BEST value in natural peanut butter.  They sold a glass jar containing 16oz of just peanuts and salt ground to a gritty perfection for just $2.29, and occasionally on sale for $2.  The nearest competitor in value was Trader Joe’s 16oz plastic jar of (IMHO) too finely ground peanuts and salt for $2.49.  When I asked the store manager what happened to the Publix brand, he told me that the store can’t even order it anymore, and their suggested option is the Publix Greenwise (organic) peanut butter, which comes in a plastic jar for (get this!) $4.99 or the Smucker’s Natural that was $2.99 (and is now $3.19).

Prices have also been steadily climbing throughout the store, with most notable recent increases that stuck in my brain including a 3lb bag of baby carrots increasing from $3.99 to $4.19 and the already high price per pound of bell peppers making that same jump.

Sales also aren’t as deep as they used to be.  My “stock up” levels on a lot of items (prices where I start to consider “buy and freeze” or “buy as much as won’t go bad”) just haven’t been hit in the last year or so.  Blueberries never got below $2 this summer, where they had been 3 for $5 in many years past and got below the $2 mark in other stores.  Cheese products (including Publix brand) only seem to go on sale for a minimum of $6/lb, where Publix brand used to be pretty reliably $5/lb and sometimes brand names as well.

They’ve also been changing the way certain sales are run, like for instance this week where cantaloupe (either organic or conventional!) is on sale for $2.50.  Instead of conventional being $1.99 and organic $2.50 or more (like other years), they price both the same and shoppers who care about value go with the bigger melons (the conventional), but they’re selling them for more than they used to.

 

Our Publix (and I assume others in the chain) has been pushing toward the higher end shopper, and according to the Palm Beach Post, their profit margins have been hitting some crazy highs with the lack of realistic market competitors in the area.  We’re talking profit margins 6%+ in 2015 and 2016, while notoriously high margin Whole Foods has dropped from 3.9% in 2013 to just 2.44% in 2016.

Don’t get me wrong – I still stand by what I wrote about three years ago in our food spending rules of thumb.  I want to shop at stores where employees make a fair wage, and where customer service and quality products are a priority, not to mention that convenience plays a non-trivial role (and Publix is the most convenient store that meets those criteria – and most convenient overall, actually).

But from my pocketbook’s perspective, I’m eager to see the possibilities that lie behind Amazon shaking up our local grocery market a bit and giving Publix some additional pricing pressure.

Fingers crossed that materializes.  I’m counting on you, Mr Bezos.

 

What has your grocery spending been like over the past few years?  Have you noticed a similar increase in prices (at Publix or otherwise)?  What are some of your hopes and predictions of the Amazon/Whole Foods merger?  

 

10 comments to Why I’m Looking Forward To Amazon Owning Whole Foods

  • We are also very soggy!

    I suspect it is Walmart that has caused the changes you see in publix, not Whole Foods. My guess is if wf becomes less expensive, Publix will just go out of business entirely. Then you’ll end up with walmart for cheap and wf for high end.
    Nicoleandmaggie recently posted..Help me with DC2’s lunch!My Profile

    • After this weekend, soggy but safe is a good thing!

      I’m not super convinced that Walmart’s the driving front behind Publix’s price increases, though. I’ve heard of at least 1 Walmart grocery store in the area (but like 20+ minutes away), but not a lot more. And it seems like that takes shopping more from Winn Dixie (or Sweet Bay that used to have more stores). The only person I know that shops at the Walmart didn’t do much shopping at Publix to begin with.

  • That’s the point–publix is trying to differentiate itself from walmart. They are no longer trying to get the cheap shoppers because Walmart has that demo sewn up, so they focus on the high end ones. Gourmet magazine had a thing on this trend ~12 years ago when the bifurcation caused by Walmart groceries was starting.
    Nicoleandmaggie recently posted..Help me with DC2’s lunch!My Profile

  • You are not alone in the grocery budget woes of the past couple years. We’re north of $400 for two people most months now, and that’s a fairly new development. So for what it’s worth, we’re kind of in the same range.

    I’d thought it was just us buying more expensive stuff…but it could be inflation.
    Done by Forty recently posted..Three Years Out: Are We on Track for FI?My Profile

    • I’m not convinced it us buying more expensive stuff, at least not completely – we’re not really fancy cheese kind of people – unless you count buying the fancy Romano to shred fresh when company is coming over. =)

      We do buy a LOT of fresh food, though. The cart is almost guaranteed to be > 50% fresh fruits and veggies, and often >>50%.

  • A friend and I were speculating about what Bezos’s goal was for buying Whole Foods, it’ll be interesting to see what’s next after dropping some of the prices. Have you used Amazon’s grocery delivery service? I had assumed there was some integration planned there but could be totally off base.

    Our grocery budget has been slowly increasing as well, and I didn’t THINK we were eating a ton of fancy things. We regularly shop at Trader Joe’s, Costco, Safeway and get our produce from a really cheaply priced high quality produce shop. For a family of 3 (plus dog who gets some of those groceries), I think we’re averaging closer to $500 a month which feels like far too much money.
    Revanche @ A Gai Shan Life recently posted..On the home(buying) front: getting the work doneMy Profile

    • I haven’t used Amazon’s grocery delivery service – but I don’t think it’s a coincidence that over the past two weeks Publix has been promoting their partnership with Instacart for grocery deliveries. =)

      After this past weeks shopping, though – I will say that so far no big changes at Publix, though Trader Joe’s lowered their price on almond butter when Whole Foods lowered theirs to the same price TJ’s used to be. We’ll see how it all works out going forward, but a little more competition can’t be a bad thing for consumers, right? =)

  • This merger has been interesting to hear about from an insider perspective. We don’t shop at either of those stores. But we haven’t noticed an increase in our food budget either.

    However we have been going out to eat a lot more. ( Or it feels that way) so maybe our food budget hasn’t increase because we are displacing some of the shopping with going out to eat.

    As for Amazon buying whole foods. I’m not a big fan. I love the movie wall-e and all I could think about when I heard about it was. Well that’s going to be buy-n-large. I don’t think it’s good for such big companies to be joining together.

    Also we have family who work at WF and it’s been hell for him recently. They aren’t even sharing with the employees enough info for them to prepare for the changes. A lot of stress and overtime lately.
    The Roamer recently posted..Mini Retirement Update: July countdownMy Profile

    • Haha, I <3 Wall-E. I get the Buy-N-Large vibe more from Costco than I do from Amazon.

      So sorry to hear about your friend having a bad experience working at Whole Foods lately! Historically I've always heard it was a great place to work and I had hoped that with the CEO of Whole Foods maintaining day-to-day control that wouldn't change. Fingers crossed that as systems integrate more fully Whole Foods will go back to being a company that is known for fairly compensating employees and being enjoyable to work at.

  • spiffi

    Last week when the amazon prices “hit” WF I read online to see what the changes were going to be. My jaw dropped when I read that rotisserie chicken was $13.99 – but now was going to be ONLY $9.99!

    WF is the closest grocery store to me – I can see it from my upstairs windows – but I won’t shop there. I grew up shopping at Safeway, and until a few years ago, it was my default store – but the prices were just going up and up and I couldn’t see the sense in paying over a dollar a pound for onions, when the FoodMaxx 20 minutes away was selling the same onions for 39 cents a pound!

    I haven’t been in a Safeway in over 3 years – now I’m noticing the latest few ads are claiming that prices are dropping – but I’m still not seeing them in line with what i’m willing to pay.

    I get my peanut butter – just peanuts and salt, Adams brand – from Walmart – it’s under $6 for a 36oz container.