(Article Originally Appeared on Forbes.com, June 17, 2017. Author: Bryce Hoffman)
Amazon’s announcement that it was buying Whole Foods Market for $13.7 billion threw the entire retail industry into a tizzy Friday — and with good reason.
Ever since Amazon.com moved beyond just selling books, Jeff Bezos and his company have disrupted one industry after another. Now, they seem poised to do it again to the grocery business.
But as shares in traditional grocery retailers tumble, speculation about just what Bezos’ brave new Whole Foods will look like is swirling like a pot of organic, sustainable harvested lentils. Will Amazon change Whole Foods or will Whole Foods change Amazon? Will Whole Foods be able to use Amazon to deliver groceries right to consumers’ front doors, or will Whole Foods become a brick-and-mortar beachhead for Amazon in communities with desirable demographics? Will Amazon sacrifice Whole Foods quality for the sake of better pricing, or will Amazon use its logistical prowess to slash Whole Foods’ prices without cutting quality?
Few people beyond Jeff Bezos and his senior leadership team know the answers to these questions yet. I suspect they are a long way from figuring them out themselves. But Bezos has provided one important clue in his decision to retain Whole Foods CEO John Mackey.
Mackey’s philosophy has evolved with his company, as he explained in his 2013 book, Conscious Capitalism.
As he told Forbes readers after the book’s publication, conscious capitalism is “a way of thinking about business to ensure that it is grounded in a higher purpose to enhance its positive impact on the world.”
Other grocery chains have sought to capitalize on America’s growing demand for organic foods. Retail giants such as Wal-Mart Stores, Costco Wholesale and Kroger have been able to steal customers from Whole Foods by providing lower cost alternatives. They are able to do so because they are less concerned about the larger goals that have informed many of Mackey’s decisions at Whole Foods.
Mackey’s unwillingness to join this race to the bottom in the organics space has put him increasingly at odds with Wall Street in recent years. Many big investors have been quite vocal in expressing their concerns about Whole Foods’ declining market share and missed business opportunities.
Mackey has tried to hold his ground. Last week found him blasting JANA Partners, the hedge-fund trying to force a sale of his company, as a bunch of “greedy bastards.”
JANA and their ilk may have won the battle by forcing Whole Foods to accept Amazon’s offer. But Mackey could still win the war if he can find a way to work with Bezos to grow the company without sacrificing its core values and mission.
Bezos seems to see the value in that, at least for the time being.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” he said in a statement after the deal was announced.
Of course, this could change. Bezos could be using Mackey to maintain order during the transition and may already be planning to jettison him once the deal is done. Until then, Mackey’s continued presence at the helm of Whole Foods suggests that the upscale organic retailer will remain just that, and not become a greener version of Walmart with a better website.
(Full Disclosure: I own shares in Whole Foods)
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