Marc A. Ross
June 30, 2017
On June 16, 2017, an audible gasp spread across the seven hills of Cincinnati, and once again it was the result of Hall of Fame leadership and execution from the technology-powered West Coast.
Push notifications were buzzing across the smartphones owned by the executives at Macy’s, Kroger, and P&G with the news that Jeff Bezos and his team at Amazon were seeking to formally defeat the business model that has shaped the blue-chip captains of commerce in Cincinnati for over a century.
“Amazon is acquiring Whole Foods.”
The last time The Queen City heard such an audible gasp was Jan. 22, 1989, following Super Bowl XXIII when the mighty Bengals fell to the upstart 49ers. The defeat of the city’s professional football team on that Sunday felt eerily similar to last Friday’s huge news that Amazon would acquire Whole Foods.
To beat the city’s professional football team in the Super Bowl, it required a legendary performance by future Hall of Fame quarterback Joe Montana. On that day, Montana masterminded a drive that took his team down nearly the length of the field in 11 plays using a playbook of disruption and speed shaped by the brilliance of coach Bill Walsh. With only 39 seconds left on the game clock and all the pressure of success and failure hanging in the balance, Montana tossed a well-executed touchdown pass to a wide receiver to secure the victory.
Since that game, the Bengals have only recorded one postseason win and currently hold the NFL’s longest active drought between postseason victories.
Now once again the city is under threat from Hall of Fame leadership and execution from the technology powered West Coast.
Jeff Bezos has long sought to redefine, refocus, and recalibrate the consumer shopping experience.
It isn’t so much that Bezos wants to sell more high-end kombucha or grass-fed beef — he wants Amazon to own more and more of consumer spending while at the same time providing endless options, lower prices, and frictionless delivery.
Amazon’s purchase of Whole Foods instantly puts the company in the neighborhood of America’s most affluent and tech savvy zip codes. Better yet, Amazon just bought 460 ultra-performance warehouses with proper cold storage and food preparation on scale.
Also, the acquisition foreshadows a future of shopping for food basics and commodity products as an activity of the past for the tech savvy and wealthy. No longer will customers be forced to buy products that are driven by advertising and designed to be accepted by the mass market. No longer will such goods only be accessible by a trip to a large store surrounded by hundreds of parking spots where items are placed into a cart, taken out of a cart, and then placed back into a cart.
The idea that I soon will be able to stop wasting any more of my limited time to buy commodity products like soap, trash bags, paper towels, and socks is fantastic. The days of driving to a big box store, pushing a cart around numerous aisles, then waiting in line to checkout, and finally then placing my parcels in my vehicle to return home are numbered.
Amazon will now be even more permitted to deliver a frictionless shopping experience plus provide huge choice and competitive prices. Empowered by giant warehouses, world-class logistics, immense shopping and behavioral data, and access to seemingly an endless supply cheap capital, coupled with Whole Foods’ physical stores, Amazon is poised to reshape the $800 billion grocery market, unlike anything we have seen since the development of scalable cold storage technology.
Just like the Bengals extended drought in postseason football, the blue-chip captains of commerce in Cincinnati face an incredible challenge to avoid the same championship void.
Will the companies of The Queen City play offense or defense?
I feel the companies will be more defensive in nature, with further mergers rippling across the grocery, retail, and consumer product goods space as Macy’s, Kroger, and P&G work feverishly to secure the consumers of the mushy middle while not seeking championships.
Marc A. Ross is an adjunct professor at George Washington University teaching a course on Globalization and American politics, the founder of Caracal Global, and former communications director for the US-China Business Council.