Whole Foods stops growing

[ClownLoach]

Oh WOW!!!!!

Thanks for that info

Over 62,000sqft for the WF? That is amazing for the area!

But...........................will all that be approved by the City? That intersection (the very busy Grove and famous Farmer's Market share that intersection) is without hyperbole a REAL nightmare. And parking for all the properties are quite awful.

P.S. 10 minute drive for a 5 mile radius????

For some reason the website wasn't responding when I tried to reply with this. They've been messing around with the idea of building that strip mall into high rise luxury condos and other such nonsense with a token replacement Whole Foods at surface level with some kind of subterranean parking forever. There were other developers fighting over it. My understanding is that every time a proposal comes in the greedy developers come up with something more grand and lavish but because of their greed it never gets done. They have supposedly been planning on redevelopment for over a decade. This looks like a lower intensity proposal as it maintains surface parking. As such it'll never get built when they can double the housing going all the way. I would not get excited about the 62K WFM size either as the buildings already that size have been stripped of unique features and larger SKU counts in recent years and the stores get consolidated towards the back wall to make leaseable space, a bar, and excessive seating up front. Basically the store is the same underwhelming format with extra seating. They put one of these in Long Beach at 60K and it pales in comparison to the originals built that size (El Segundo and Tustin) before they were scaled back.

According to the city's Planning Commission site, the project was conditionally approved in May of 2022, so looks like you are going to get that bigger Whole Foods.

Not anytime soon. There is a different development plan that was going to be 26 stories tall (!!!). Basically the Kmart Plaza and the Whole Foods Plaza are different properties.

One proposal has a shorter property with WFM moving in (the Kmart property). The other property was going to be 26 stories but has been reduced and in that case WFM stays where they are.

The Beverly-Grove neighborhood has been fighting over this forever, along with the competing developers and such.

Conditional approval doesn't mean squat, I am surrounded by conditional approvals nearly 40 years old and not built.

This site is a battleground with the neighborhood and the developers competing. These developers don't care about WFM or CVS or any of the existing tenants and just want to use them since they are currently able to get around the building codes and zoning processes in an expedited manner if they make a project "mixed use." If those laws went away tomorrow they would be trying to evict both stores to make a few extra dollars on additional housing units since the value per square foot is so much higher. This is the outcome the developers would prefer versus the approved scaled back project. It looks like Regency is trying to develop the Kmart side and move WFM over while Holland Partner is trying to develop the existing WFM side and keep them. Based on what @veteran+ has reported this Kmart deal with Regency may be dead which makes sense as it's a less intensive use than the developers would like.

And now it seems that Amazon has halted WFM development which was the point of my post. I think Amazon is waiting for the outcome of the Kroger-Albertsons deal... I would not be surprised if they submitted a bid for Albertsons to merge it with WFM if the deal is halted by the FTC.

[buckguy]

They've just opened a new store in Jersey City and will open another in South Windsor, CT (Greater Hartford) next month. They opened one in DC on the former Walter Reed campus this summer and it doesn't look like it will be replacing the one in Silver Spring that's probably no more than a couple miles away. They have another store opening in Reston, VA most likely as a replacement and a a new store planned on Long Island.

They did recently close a store in Toledo, Ohio. The only store in the area, in a good location for them, originally planned as WF360. They also closed one Houston in what sounded like a more spec location.

[babs]

For some reason the website wasn't responding when I tried to reply with this. They've been messing around with the idea of building that strip mall into high rise luxury condos and other such nonsense with a token replacement Whole Foods at surface level with some kind of subterranean parking forever. There were other developers fighting over it. My understanding is that every time a proposal comes in the greedy developers come up with something more grand and lavish but because of their greed it never gets done. They have supposedly been planning on redevelopment for over a decade. This looks like a lower intensity proposal as it maintains surface parking. As such it'll never get built when they can double the housing going all the way. I would not get excited about the 62K WFM size either as the buildings already that size have been stripped of unique features and larger SKU counts in recent years and the stores get consolidated towards the back wall to make leaseable space, a bar, and excessive seating up front. Basically the store is the same underwhelming format with extra seating. They put one of these in Long Beach at 60K and it pales in comparison to the originals built that size (El Segundo and Tustin) before they were scaled back.

According to the city's Planning Commission site, the project was conditionally approved in May of 2022, so looks like you are going to get that bigger Whole Foods.

Not anytime soon. There is a different development plan that was going to be 26 stories tall (!!!). Basically the Kmart Plaza and the Whole Foods Plaza are different properties.

One proposal has a shorter property with WFM moving in (the Kmart property). The other property was going to be 26 stories but has been reduced and in that case WFM stays where they are.

The Beverly-Grove neighborhood has been fighting over this forever, along with the competing developers and such.

Conditional approval doesn't mean squat, I am surrounded by conditional approvals nearly 40 years old and not built.

This site is a battleground with the neighborhood and the developers competing. These developers don't care about WFM or CVS or any of the existing tenants and just want to use them since they are currently able to get around the building codes and zoning processes in an expedited manner if they make a project "mixed use." If those laws went away tomorrow they would be trying to evict both stores to make a few extra dollars on additional housing units since the value per square foot is so much higher. This is the outcome the developers would prefer versus the approved scaled back project. It looks like Regency is trying to develop the Kmart side and move WFM over while Holland Partner is trying to develop the existing WFM side and keep them. Based on what @veteran+ has reported this Kmart deal with Regency may be dead which makes sense as it's a less intensive use than the developers would like.

And now it seems that Amazon has halted WFM development which was the point of my post. I think Amazon is waiting for the outcome of the Kroger-Albertsons deal... I would not be surprised if they submitted a bid for Albertsons to merge it with WFM if the deal is halted by the FTC.

Merging Albertsons with WFM makes zero sense.

[ClownLoach]

According to the city's Planning Commission site, the project was conditionally approved in May of 2022, so looks like you are going to get that bigger Whole Foods.

Not anytime soon. There is a different development plan that was going to be 26 stories tall (!!!). Basically the Kmart Plaza and the Whole Foods Plaza are different properties.

One proposal has a shorter property with WFM moving in (the Kmart property). The other property was going to be 26 stories but has been reduced and in that case WFM stays where they are.

The Beverly-Grove neighborhood has been fighting over this forever, along with the competing developers and such.

Conditional approval doesn't mean squat, I am surrounded by conditional approvals nearly 40 years old and not built.

This site is a battleground with the neighborhood and the developers competing. These developers don't care about WFM or CVS or any of the existing tenants and just want to use them since they are currently able to get around the building codes and zoning processes in an expedited manner if they make a project "mixed use." If those laws went away tomorrow they would be trying to evict both stores to make a few extra dollars on additional housing units since the value per square foot is so much higher. This is the outcome the developers would prefer versus the approved scaled back project. It looks like Regency is trying to develop the Kmart side and move WFM over while Holland Partner is trying to develop the existing WFM side and keep them. Based on what @veteran+ has reported this Kmart deal with Regency may be dead which makes sense as it's a less intensive use than the developers would like.

And now it seems that Amazon has halted WFM development which was the point of my post. I think Amazon is waiting for the outcome of the Kroger-Albertsons deal... I would not be surprised if they submitted a bid for Albertsons to merge it with WFM if the deal is halted by the FTC.

Merging Albertsons with WFM makes zero sense.

Albertsons was the other bidder for WFM when it was for sale, and supposedly Amazon decided they would set an unlimited budget to outbid them even though they were overpaying. WFM was seen as the future of food retail, and maybe was until Amazon screwed it up which has proved almost irreversible. In hindsight, Albertsons would have been a much better merger partner because Amazon has proven to know nothing about retail.

WFM would thrive if Amazon handed over control of the daily business to Albertsons since they actually understand grocery store management. Amazon can go back to what they do best which is online shopping platforms and delivery. It would be a win-win and the cost savings of using the Albertsons distribution system and warehouses would be significant. They could also convert some Albertsons to Whole Foods if it would be a better format; I would think the entire Pavilions chain would be converted.

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

[HCal]

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

Are you suggesting that Albertsons acquire Whole Foods, or vice versa?

The former would probably not happen since Amazon would be admitting defeat. I don't think Amazon has ever sold or spun off any business unit in its history. They really don't need to, and the few billion dollars they would get for it would be insignificant. They are better off just keeping it chugging along than handing it to a competitor and helping them grow.

The latter might be problematic from an antitrust perspective. Kroger and Albertsons are currently arguing that they need to merge in order to better compete with Amazon (which is nonsense, but that's their argument). If that's the case, then how can they justify making Amazon even bigger in the grocery sector?

[buckguy]

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

Are you suggesting that Albertsons acquire Whole Foods, or vice versa?

The former would probably not happen since Amazon would be admitting defeat. I don't think Amazon has ever sold or spun off any business unit in its history. They really don't need to, and the few billion dollars they would get for it would be insignificant. They are better off just keeping it chugging along than handing it to a competitor and helping them grow.

The latter might be problematic from an antitrust perspective. Kroger and Albertsons are currently arguing that they need to merge in order to better compete with Amazon (which is nonsense, but that's their argument). If that's the case, then how can they justify making Amazon even bigger in the grocery sector?

The notion that Albertson's knows how to run supers would seem to be challenged by a trip to my local Safeway (high prices, low quality in areas like bakery) or any of the complaints about Albertson chains that are regularly made here.

It's an interesting point that Amazon has not done spinoffs and there really isn't an obvious suitor that is an experienced retailer. It's probably muddling through. The alternative would be selling to whatever vulture capital calls itself these days, but I doubt that Amazon would want to part with the data on well-off customers that they collect.

[BillyGr]

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

Are you suggesting that Albertsons acquire Whole Foods, or vice versa?

The former would probably not happen since Amazon would be admitting defeat. I don't think Amazon has ever sold or spun off any business unit in its history. They really don't need to, and the few billion dollars they would get for it would be insignificant. They are better off just keeping it chugging along than handing it to a competitor and helping them grow.

The latter might be problematic from an antitrust perspective. Kroger and Albertsons are currently arguing that they need to merge in order to better compete with Amazon (which is nonsense, but that's their argument). If that's the case, then how can they justify making Amazon even bigger in the grocery sector?

Sounds like it would be Amazon buying Albertsons, then letting those running Albertsons run both that and Whole Foods.

[ClownLoach]

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

Are you suggesting that Albertsons acquire Whole Foods, or vice versa?

The former would probably not happen since Amazon would be admitting defeat. I don't think Amazon has ever sold or spun off any business unit in its history. They really don't need to, and the few billion dollars they would get for it would be insignificant. They are better off just keeping it chugging along than handing it to a competitor and helping them grow.

The latter might be problematic from an antitrust perspective. Kroger and Albertsons are currently arguing that they need to merge in order to better compete with Amazon (which is nonsense, but that's their argument). If that's the case, then how can they justify making Amazon even bigger in the grocery sector?

I'm simply bringing up the fact that if the Kroger-Albertsons deal is killed, Albertsons most likely will still be on the block. There will not be a lot of suitable buyers with the money to make a deal.

And the fact is that we all know Kroger's hilarious PR team (you know the same ones that say they'll both go out of business entirely if not merged) has grossly and wildly inflated the alleged grocery sales of Amazon.

Amazon doesn't make a dent in the market and they know it. There is no antitrust issue because their volume is in reality puny. Furthermore, the same flawed logic that the FTC is going to use to squash the Kroger deal is exactly what will make an Amazon deal okay - WFM will be considered to be a different kind of business. Fresh is a joke and in fact so small that the FTC rules won't even consider it to be a large enough entity to be considered by antitrust and merger review. I mean seriously, those stores aren't pulling in $50K a week... There are dollar stores and such that bring in more revenue.

And yes I get that Norcal is operated poorly and priced astronomical high and other flaws at Albertsons (WFM is sky high there too), but Whole Foods is broken in many areas and I question if it is at risk of falling out of profitability due to lack of experience in the management ranks. Grocery store industry management can bring in best practices that they surely lack; I don't think they even understand date rotation looking at how they stock and always have the freshest item in front. They certainly spend too much on store construction and such which further speaks to their lack of experience. And Albertsons already has a good online grocery delivery platform although they made the mistake of switching to less reliable Doordash type delivery crews. Amazon might be a solution to that problem as they can easily integrate their systems to have an Amazon delivery truck pick up a fresh order in its route and then deliver it without worrying about what kind of conditions might lie within the delivery vehicle.

And since the big question will come up - if Amazon is serious about the grocery industry then they have to understand that so much of the industry is unionized that they are not going to be able to grow by acquisition without gaining union representation somewhere. Amazon has faced the enemy head on and taken surprising stances in the past to grow their business - they faced the California and other states taxation agencies and volunteered to collect tax which removed a huge shopping incentive, but they did it out of recognition that they could grow their distribution and transportation networks to lower costs and increase convenience with same day or next day delivery. That decision was as big as working with unions would be, and Amazon scored a grand slam when everyone said they were going to strike out.

Amazon seems to be letting SpartanNash run their Fresh stores out of the realization they don't know what to do. This is why I don't think they would have a problem with bringing Albertsons and their entire management team over there, merging WFM into the Albertsons unit, and letting them run it. Amazon can sit in the backseat and learn how the grocery industry actually works.

Fact is that the private equity folks who still own most of the Albertsons stock want it sold, and they need someone with deep pockets and little to no antitrust risk. We all think that a Kroger deal is going to be killed, but it won't take Albertsons out of play. Furthermore if the FTC is going to play hardball and removes Kroger as a buyer then I think they take Ahold-Delhaize out of the mix too for the same reason. So suddenly it becomes a decision point for Amazon, their last chance to buy a nearly national grocery partner since they're too inept to grow their own.

[ClownLoach]

Furthermore, if Albertsons is still to be sold it is literally the only opportunity that remains for Albertsons to acquire a 2000+ store chain that covers more than half the country. So actually it makes a tremendous amount of sense for Amazon. Clearly they're not going to grow a 2000+ store chain out of Fresh anytime in the next few decades.

If Amazon is still serious about becoming a national grocer, then this is the last chance they have to become one through acquisition. And I suspect that Cerberus and Apollo are still serious about cashing out their tens of billions in Albertsons stock which will still require a buyout. Can you think of any other qualified buyer with the funds to purchase Albertsons along with a purpose for acquiring them? I can't.

Are you suggesting that Albertsons acquire Whole Foods, or vice versa?

The former would probably not happen since Amazon would be admitting defeat. I don't think Amazon has ever sold or spun off any business unit in its history. They really don't need to, and the few billion dollars they would get for it would be insignificant. They are better off just keeping it chugging along than handing it to a competitor and helping them grow.

The latter might be problematic from an antitrust perspective. Kroger and Albertsons are currently arguing that they need to merge in order to better compete with Amazon (which is nonsense, but that's their argument). If that's the case, then how can they justify making Amazon even bigger in the grocery sector?

Sounds like it would be Amazon buying Albertsons, then letting those running Albertsons run both that and Whole Foods.

Correct

I think we also need to recognize that yes, Amazon is a big company, but they're not big where we think they are. AWS is the biggest profit driver and revenue generator as they basically are running more than half the internet and everything from the servers for entire streaming services to the "cloud" platforms for giant corporations.

Retail is big, but again a much smaller percentage of it is actually Amazon than we all realize. They are a marketplace company and better compared to eBay in many regards since they facilitate the transactions but don't actually buy the inventory. The vast majority of the merchandise these days is sold through marketplace vendors and the percentage is growing not shrinking.

So they should be able to acquire a business like Albertsons. Flip side, they could sell Whole Foods and possibly make a slight profit but that all depends on how good (or as we suspect bad) the numbers really are.

But to pretend that Amazon has unlimited cash to keep throwing at money losing retail operations is short sighted. Amazon was already forced to set aside almost a billion dollars because of the faltering Fresh business. When a segment like that becomes unstable they have to admit it to Wall Street and the resulting loss of stock value is many times the value of the segment. So if you're a majority shareholder like Bezos who still calls in regularly to HQ, and you know they can increase stock value by several hundred billion dollars just by spending pennies of stock (not cash!) on a deal like buying Albertsons or another firm, then you're going to push for that deal. The value of fixing the undervalued segment of the business is going to far exceed the cost to fix it. (Or heck the benefit of selling WFM if they decided to cash out would also benefit the stock far more than the sale proceeds if they had to go that way).

I firmly suspect that Amazon was going to be the Albertsons buyer, but then the hubris of Kroger led them to make a preposterous bid where they would grossly overpay. With how few stores actually get acquired versus how many are sold for pennies to C&S the truth is that Kroger is getting such a bad deal that they should not fight when the FTC sues to stop it. Kroger could build a fleet of at least a thousand additional stores to fill in the gaps for less than they're going to pay for Albertsons minus hundreds of divests.

[reymann]

with amazon hitting a wall in the grocery business, i wonder if they look at spinning off or selling whole foods and amazon fresh in 2024.