It’s been three years since Amazon announced it would buy Whole Foods for $13.7 billion. And yet, despite the public – and industry – outcry, the retail food business is still standing, even during a global pandemic.
The expectations – and fears – generated by that announcement, and the economic downturn since have been mostly unrealized. Maybe it’s too early, but little has changed.
Amazon itself, however, has enjoyed one significant change. Moody’s estimated that “Amazon, thanks to Whole Foods, generated $18 billion to $20 billion in grocery-equivalent revenue in 2018, significantly shy of the $270 billion in U.S. grocery sales it estimated that Walmart, including Sam’s Club, posted.”
Additionally, “Amazon saw no sales growth at physical stores for its fiscal 2019 fourth quarter and full-year despite overall sales gains of at least 20% for both periods,” according to Supermarket News.
Fiscal 2019 physical-store sales totaled a little more than $17.1 billion, falling just a bit – 0.2% – from $17.22 billion in fiscal 2018.
Online, Amazon sales grew 14.7% in the fourth quarter of 2019 to $45.66 billion – up from $39 billion from the year before. For the full year, online store sales were $141.25 billion, up 14.8% from $122.99 billion in 2018.
At last count, Amazon boasted 487 Whole Foods Markets physical stores in the United States with a couple dozen other scattered across Canada and the United Kingdom. According to Supermarket News, the company also operates 25 Amazon Go cashier-less convenience stores, 21 Amazon Books stores, nine Amazon 4-Star outlets, and five Presented by Amazon locations.
Sure, it remains an industry in transition, and shifting consumer demands, driven by the pandemic and a struggling economy, among other things, will continue to challenge Amazon as well as traditional retailers.
While demand for food remains high, grocery retailers and store brand owners must prepare for an uncertain future. Check out our On-Demand Webinar “Grocery and Private Label Retail Supply Chain Survival Tips,” for insight on what retailers can do now to navigate the COVID-19 threat and emerge stronger.