Posted on 06/17/2017 3:13:57 PM PDT by 2ndDivisionVet
News that Amazon intends to buy Whole Foods Market for more than $13 billion was greeted jubilantly by financial markets, with Amazon’s stock rising 2.5 percent, almost enough to cover the entire purchase. At the same time, the shares of other grocery retailers, ranging from Kroger’s to Walmart, were punished severely, plunging as much as nine percent. That mixed reaction—riches for Amazon and excitement from consumers, amidst the decimation of an entire sector of the economy—proves the company’s power. The move takes it one step closer towards founder Jeff Bezos’ long-held ambition of becoming the “world’s store,” and it is unquestionably the central actor in the remaking of American, and perhaps global, consumerism. What remains unclear is whether it is overall a force for good, or a destroyer of traditional retail that erodes jobs, ruins malls, and transforms a once-productive workforce into underemployed, couch-bound consumers.
It took Amazon two decades to amass this kind of authority. Almost exactly seventeen years ago, on Friday, June 23, 2000, Amazon (then Amazon.com) saw its stock crater by twenty percent after the then-powerful investment bank Lehman Brothers issued a warning that the company was on the verge of insolvency, so quickly was it spending down its cash reserves. Amazon had already shed more than sixty percent of its value over the previous six months, and Bezos alone had lost billions in paper wealth. Yet he remained confident that his company, less than ten years old, would one day be selling everything to everybody.
Back then Amazon was worth about $15 billion, a valuation that would fall to less than $5 billion in 2002; today, it is worth nearly $500 billion. Market cap alone is no guarantee of future strength (just look at IBM in 2012), but in the case of Amazon, it does represent at least a radical shift in how financial markets value the company, even as it continues to plow a massive percentage of its revenues into new and different markets: drones, data centers and, as of today, supermarkets.
Though not technically a company from Silicon Valley, Amazon has always felt like part of it. Bezos talks the same patois of the virtue and necessity of failure; he likes the cliché of “swinging for the fences”; and he believes that building a dominant disruptive behemoth is good, ultimately, for customers and the world, making it possible for more people to get what they need, when they need it, at a cost that only declines.
But Amazon also behaves like a traditional retailer in many ways, which makes it not quite like the bits-and-bytes-addled dreamers of the Valley. It has undercut its brick-and-mortar competitors by consistently underpricing and even selling at a loss for years until its competitors—saddled as they are by rents for space and salaries for the many humans who have to staff those stores—can no longer compete.
The implosion of mainline retailing is not solely due to Amazon, but it is hard not to place the bulk of the sector’s woes at the e-tailer’s feet. Retail stores are closing at a record rate—as many as 8,000 this year. That’s thousands more than in 2008, the previous worst year on record, which bore the brunt of a whole-scale economic collapse. Those stores employ hundreds of thousands of people, and when those jobs disappear to e-commerce, they don’t come back.
So does Amazon create value by seamlessly distributing goods, or destroy it by demolishing jobs? The answer, of course, is both. While Washington focuses almost entirely on the last gasps of manufacturing and coal mining employment, e-commerce and Amazon threaten far more jobs. Yet Amazon also offers the potential of far more affordable goods at lower costs. It truly defines creative destruction.
The benefit of those goods extends beyond convenience. Home delivery frees up time and gasoline money. Providing easier, cheaper access to nourishing Whole Foods products could save many billions of dollars in improved health and nutrition. And Amazon has shown that it is not determined to eradicate hardline retail, or the jobs that come with it. Bezos seems to understand the human need for social shopping, and the continued place it will have in our lives; hence his buying an actual supermarket chain and opening a series of bookstores, similar to the ones it spent so much time trying to drive out of business in its early years.
Futhermore, the model Amazon is displacing is not some Platonic ideal of economic health. In our sentimental rush to defend mall culture, we should remember that malls arose from the explosion of suburbs in the 1970s, a development that led to the precipitate decline of towns and smaller cities across the United States. Strip malls and big-box retailers destroyed communities by eradicating small businesses in traditional downtowns. We should not now bemoan the disruptions of those malls at the hands of a company that offers far more choice and better quality at far less costs and greater convenience.
We don’t yet know, of course, what jobs will replace the ones being made anachronistic by e-commerce. We know what is being lost, with only a few inklings of how the gains will be distributed. The promise of a digitally-enhanced, voice-activated home where you only have to say what you need before your accounts are debited and goods delivered is both a utopian and dystopian vision. It is fitting that Amazon is at the apex of those changes, driven both by a utopian ambition and a dystopian drive to dominate competitors.
The purchase of Whole Foods introduces those divergent urges to a new, intimate arena: food, which everyone needs and everyone consumes. If the company can succeed at the grandest level, it will result in better food for everyone—but it may take an unsavory path to achieving that goal. Amazon’s drive is as fraught with risk as it ever was, but looking a decade ahead, the result is likely to be enhanced quality of life for more people than ever before, even as the changes continue to be unsettling and tumultuous.
I really like to shop for food. Check the ripeness. I don’t think I will shop online for food, other than things like canned tomatoes
“I really like to shop for food. Check the ripeness. “
==
I DETEST food shopping and do it on-line and have it delivered.
I use a local supermarket chain and have had no problems in the two years that I have been doing it.
.
.
Not a fan of Bezos’ politics, but I have to say Amazon is one of the best run, most efficient and friendliest companies I’ve ever dealt with. And Amazon Prime is a must for anyone who ever orders anything.
They already have a grocery “store” for Prime members. I recently put together a big box of groceries for a disabled friend, it was de!ivered in a couple of days, she was overjoyed, and it made me realize how much such a service is needed since most dairies and grocery stores don’t deliver anymore.
+100000000 :)
At what point does Amazon run afoul of anti-trust/monopoly laws?
Well he owns the Washington Post that attacks President Trump in every article, even those having nothing to do with politics, so I’m guessing the administration won’t be too keen on it. But I could be wrong.
I had the same thought.
Whenever someone in government decides it the right time “politically “ to make issue of it.
Not a big fan of “anti-trust” legislation, too easy to use it for political purposes.
Then here’s moral principle of FedGov arbitrarily deciding someone has too much property. It will always be done “politically “!
“At what point does Amazon run afoul of anti-trust/monopoly laws?”
—
Who knows,but the same 5 companies controlling the media bothers me more-————they control information.
.
You are right, unfortunately.
The other factor is interaction of people from diverse backgrounds. That time in the grocery store is for many if not most people the only time they relate to people outside their comfort zone. We need more, not less, opportunities for such interactions.
I like to go into the store and actually see things; but I also love grocery delivery. We’ve been using it more and it really is convenient, and I’m grateful for it on weekends when we’re busy or just really tired and don’t want to do the shopping thing.
The problems are that perhaps 3 out of 5 times that we order, something we wanted or needed was out of stock. One time the driver forgot to bring up all of our refrigerated food, so we had to wait two days to get it re-delivered. The prices are higher, and you can’t get the same good deals with coupons. I can do much better price-wise by shopping on my own in the store.
My husband, however, believes it all evens-out when you factor in time, traffic, grief. So I guess we’ll continue to use it some of the time.
Also....I would think impulse buying would be reduced. ( Another savings.)
I agree with your last statements. I had this conversation with my brother, who would be happy if he could have everything delivered and never have to go into a store. But I like getting out and seeing new people and having the occasional interaction with them.
Richard Louv, who wrote “Last Child in the Woods”, has written several books concerned with the way that so many young kids these days are almost divorced from the natural world, and how this is harming them and all of us. I think we can become divorced from human nature, as well, with equal harm.
That is definitely true with the grocery store. Not with Amazon, though - the wish list just grows exponentially ;-)
The traitor Bezos has thrown in with the commie snakes at Post. I wouldn’t touch Amazon with a 10-foot pole. Bezos is riding the whirlwind. When Amazon collapses, the fallout will be spectacular. I’ll be looking for signs of the imminent collapse and short that sucker Bezos.
.
Bezos is acting on inside information!
The Net is soon to collapse, so he is simply hedging his bets.
.
I think there is a major overhype on this purchase. Whole Foods was sold because it was failing. There were numerous investigations of mislabeling, product weight shortages, disproved “all natural” claims, dropping sales, etc. We will see.
Central Market, owned by HEB is a much better store.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.