What Amazon’s acquisition of Whole Foods means for Austin

Whole Foods Market's 365 in Cedar Park
Whole Foods Market's 365 in Cedar Park

AUSTIN (KXAN) — Amazon’s surprise decision to spend $13.7 billion on Austin-based Whole Foods left many local shoppers scratching their heads. Amazon will now take over the organic empire with 456 stores but struggled to rein in prices and integrate technology.

The announcement shocked many lunch-goers at Austin’s flagship store on North Lamar Boulevard.

“I’m like a little surprised, honestly I didn’t expect that,” said shopper Luis Solis. Leaving some, like Solis, with a bad taste in their mouth. “Oh yeah, prices will definitely go up. I think I’ll stop coming as often. I work right across the street so it was nice being able to come for a big burrito that’s not that expensive and now it’s going to change.”

The news also surprised some industry experts not about the acquisition in general, but rather who.

“I can’t say that I was surprised that someone came in and picked up Whole Foods,” said Barbary Brunner, CEO of Austin Technology Council. “But I was shocked to hear that it was Amazon, and then my immediate thought was that it makes complete sense for their business model.”

In the retail meets e-commerce stunner, consumers should get ready for a complete rebrand of the traditional supermarket.

“I don’t think brick and mortar retail will ever be the same,” said Kyle Bunch, managing director of strategy at RG/A, an Austin advertising agency.

“If I were Trader Joes, I’d be worried. If I were Kroeger, I’d be worried.”

Bunch says changes will be gradual but you’ll most likely see them popping up in the store at first.

“I think you’ll start to see places where digital technology and some of the innovations that Amazon has been playing with will start to come in and from there I think things like delivery will be big as well,” Bunch, who has a background in retail, explained.

The perception for some shoppers is Whole Foods, especially in Austin, may lose some of its character.

“I hope they keep the culture the same,” said shopper Girish Balakrishnan.

But rather than change your in-store experience, Amazon may simply capitalize on it.

“It’s not like we are losing a mom and pop co-op, we are actually gaining a very powerful partner, that will make our local entity a lot stronger,” Brunner said.

“So many of the things you buy at Whole Foods, you have to go in, you have to experience it. So what are other things that Amazon can get an opportunity to put in front of you while you’re there?” Bunch said.

The move could give the online retail giant a huge competitive edge as shares with other grocery chains plummeted following the announcement Friday.

“Oh, I think the competition should be scared. If I were Trader Joes, I’d be worried. If I were Kroeger, I’d be worried,” Brunner said.

Brunner and Bunch both expect other grocery stores to play copy cat.

“I would expect to see some of the other traditional grocery retailers make some investments in technology and buy some technology startups that can help them kind of create a similar offering to what this Amazon/Whole Foods offering would look like,” Bunch said.

The Austin Chamber of Commerce says, “This game changing announcement is yet another example of the strong creative culture and talent throughout the Austin region that enables innovative businesses to start, grow, and attract a significant level of investment.”

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