Opinion: Amazon-Whole Foods Deal’s Missing Ingredient is People


We in the cooperative community roll our eyes when we hear someone confuse Whole Foods with a food cooperative. Those days seem to be coming to a close when last week news broke that e-commerce giant Amazon will purchase Whole Foods for $13.7 billion by the end of the year. The resulting conglomerate: a co-op it is not.

Business news outlets are reporting that Amazon is seeking the Whole Foods asset to aggressively expand its strategy to stake a presence in brick-and-mortar stores. The move also positions Amazon to achieve its longtime goal of breaking into the grocery industry—currently, e-commerce accounts for just 2 percent of America’s food-and-beverage sales.

In the rash of stories that have since popped up, none of them counted as a reason a desire by Amazon (or Whole Foods, for that matter) to provide its customers or employees more local control, ownership, or benefits than either corporation currently provides.

Last week’s news came as a jolt to everyone with a stake in the evolution of not only the grocery industry, but retail in general. Amazon seeks to leverage its overwhelming e-commerce dominance with the unique footprint and customer base of Whole Foods—then use that combination to learn how to expand well beyond the relatively affluent enclaves in which Whole Foods is typically located. What does this mean for the cooperative movement? How should we respond?

As people-centered businesses, our first instinct must be to consider how these micro and macro-economic dynamics affect our members and how cooperatives can better position themselves as the ideal business model to empower customers and employees and support their communities.

Being responsive and ready to meet the changing needs of the community is exactly what Willy Street Co-op did when it opened its third store last year. Located in Madison’s North Side—formerly a food desert—the co-op opened in late 2016 after working with the neighborhood to determine product selections and set price points. While the new location offers the local, organic and natural food Willy Street has been known for since 1974, consumers can also find products like Ore-Ida Tater Tots in the frozen section. This effort to broaden product selection and accessibility is part of Willy Street’s mission to be a cornerstone of a vibrant community.

As what Karen Zimbelman, director of Membership and Cooperative Relations for National Co+op Grocers, refers to as “solution machines,” cooperatives need to look at how to innovate and better leverage the assets they already have in the market and in the community. One key asset at their disposal is the sixth cooperative principle: Cooperation among Cooperatives.

Here’s an example of what can happen when cooperatives come together to leverage the principle of cooperation to innovate: In the late 1960s, a handful of electric co-ops formed another cooperative to scale and streamline some basic back office functions, such as payroll. Fast-forward to today, and that co-op—the National Information Services Cooperative (NISC)—now has more than 1,000 employees and is a major provider of information technology products and services in 49 states.

An industry leader in providing advanced, integrated IT solutions, NISC develops and supports technology solutions that enable its member-owners to excel in customer service, maximize diversification opportunities and compete effectively in the changing utility and telecommunications industries.

What if the co-op movement matched its priorities of local ownership and community benefit with new technological opportunities to become engines of innovation? Determining the best way to compete in a changing marketplace without compromising the core of our philosophy is something we can only achieve together.

We also need to keep in mind that innovation extends beyond technology. A Forbes op-ed yesterday argues that grocery store employees and the fight for a $15 minimum wage are the real losers in the Amazon-Whole Foods deal. At Central Co-op in Seattle, Washington, entry-level employees enjoy unparalleled compensation within the grocery industry with wages approaching $16/hour. Innovative ways of collaborating, building social capital and building community like this are the core strength of the cooperative business model.

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