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Make No Mistake: Wal-Mart Executives Are Losing Sleep

The Bull Pen profile picture
The Bull Pen


  • The challenge of the Amazon/Whole Foods deal will be in preserving the Whole Foods culture, while integrating bold new practices for online and delivery.
  • Amazon gains valuable real estate, information, and grocery team.
  • Amazon will cut grocery prices, integrate its online platform, and take the market from Wal-Mart.

The Whole Foods Market (WFM) and Amazon (NASDAQ:AMZN) deal has the potential to fulfill the aspirations and promises of both John Mackey and Jeff Bezos. For John, it’s about making healthy, natural and organic foods accessible to more people around the world. For Jeff, it’s about a relentless determination to create the ultimate shopping experience for everything, and for everyone – and, in the nearer term, to beat Wal-Mart (WMT).

Accomplishing those two goals is also essential to their success as a combined entity. Jeff Bezos must preserve the culture, which creates the Whole Foods shopping experience. He must figure out a way (assuming he hasn’t already) to effectively streamline the two businesses, thereby leveraging his core business, and dominating the grocery market.

In the early 1980s, few people, John Mackey among them, would have anticipated the impact Whole Foods Market (formerly SaferWay) would have on the grocery industry, as well as on public health. They have been the driving force, bar none, of a subsector of the grocery industry, consisting of natural and organic foods. Natural and organic foods have significantly outpaced the growth of the overall grocery industry, according to the Department of Agriculture Economic Research Service.

And the Organic Trade Association claims organic food sales grew by over 8% last year, compared to less than 1% for the overall industry. There are few signs this trend won’t continue, as our society becomes more health conscious, and rising healthcare costs remain a pressing concern for businesses and individuals alike. As the sector becomes more competitive, supply costs will naturally come down for natural and organic foods as well.

Whole Foods began simply because Mackey, as an employee at a small Austin natural foods store, believed he could run his own store and wanted to give it a try. Later, with a couple

This article was written by

The Bull Pen profile picture
Evaluating risk, and valuing risk is what it's all about. - Eddie LampertEntrepreneur and investor for over 11 years.Bachelor's Degree in Economics.

Analyst’s Disclosure: I am/we are long WFM.

Business relationship disclosure: I am part of a company that does business with WFM.

I/we might initiate a Long position in AMZN over the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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