Whole Foods CEO hints at another brand under Amazon


Reuters

UPDATE 2-Whole Foods CEO hints at another brand under Amazon


(Adds executive and analyst comments, byline)
    By Jeffrey Dastin and Lisa BaertleinJune 19 (Reuters) - After Amazon.com Inc <AMZN.O> completes
its takeover of high-end grocer Whole Foods Market Inc <WMF.O>,
it might launch another brand with different standards, the
grocery chain's chief executive said in remarks reported in a
securities filing on Monday.
    Amazon plans to keep the natural grocer's high standards,
Whole Foods Chief Executive John Mackey said, adding,
"They're not stupid enough to go change that." The filing
contained a transcript of a town hall meeting for Whole Foods
employees.
    But Mackey, at the Friday town hall, said, "Over time, there
could be other formats that evolve that - that might - wouldn't
be branded Whole Foods Market, potentially, wouldn't be our
standards."
    The remarks offered a preview into how e-commerce giant
Amazon might turn around the sluggish sales of Whole Foods since
announcing on Friday it would buy the company for $13.7 billion,
including debt. [nL3N1JD3Z4] Industry observers have said that
Amazon may add a selection of discounted, non-organic food to
distance the chain from its "Whole Paycheck" nickname.
    Whole Foods already has a separate store, called 365, which
offers private-label goods and lower prices than its typical
formats. The company has needed to tread a fine line between
introducing more conventional and affordable products, while
maintaining the allure of a premium brand.
    "That's their dilemma," said Roger Davidson, who oversaw
Wal-Mart Stores Inc's <WMT.N> global food procurement and now is
president of Oakton Advisory Group. Mackey is "being pulled both
ways."
    The Whole Foods chief said Amazon's technology will help the
grocer transform from "class dunce" into "valedictorian."
Amazon, which made a splash last year with a checkout-free
grocery store, has said it has no plans to automate the jobs of
Whole Foods cashiers.
    Technology is just one way Amazon stands to change Whole
Foods and its culture, though.
    Amazon's focus on frugality contrasts with Whole Foods,
known to have higher costs than peer grocers.
    "It's too early to talk about how benefits and compensation
may synch up," Mackey said of the topic, after jesting that
Whole Foods employees will get free Amazon devices on merger
day.
    And Amazon has plenty to learn about bricks-and-mortar
grocery.
    Amazon's Worldwide Consumer chief, Jeff Wilke, said at the
town hall that Whole Foods' healthier options helped change how
people think about food. A misstatement about his breakfast,
though - quinoa, blueberry "and some other vegetables" - became
a joke.
    "Those aren't vegetables," jested Mackey. "We're learning."

 (Reporting by Jeffrey Dastin in San Francisco; Editing by
Sandra Maler and Leslie Adler)
 ((Jeffrey.Dastin@thomsonreuters.com; +1 415 344 4914;))

Keywords: WHOLE FOODS M&A/AMAZON.COM CEO (UPDATE 2)



This article appears in: Stocks , Technology
Referenced Symbols: AMZN , WMF , WMT


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