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Grocery wars intensify anew as Whole Foods to cut prices on hundreds of items by 20% starting tomorrow

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Whole Foods, the high-end grocery store bought by Amazon in 2017, plans to cut prices on hundreds of items by as much as 20 per cent as of Wednesday, including at locations in Canada.

Amazon says most of the cuts will come in produce and other fresh items and will amount, on average, to about 20 per cent in savings where they are in effect.

It’s the third such round of widespread cost cutting since Amazon bought the chain in the fall of 2017.

The takeover at the time came as a bit of a surprise, since it was the marriage of two companies with vastly different strategies and markets.

Amazon started as an online bookstore and soon grew to become the largest online retailer of just about everything else by focusing on cutting costs while expanding selection and offering delivery speeds that other sellers struggled to match.

Its Amazon Prime service, where customers can get same-day delivery on millions of products for an annual fee in Canada of $79, has helped them cement customer loyalty even more.

Whole Foods, meanwhile, began as a health food store in Austin, Texas, in 1980 that steadily grew across the U.S. and then into Canada by catering to health-conscious shoppers who didn’t mind paying more for items they deemed to be healthier.

When Amazon bought the chain, many wondered what the long-term plan was, and Wednesday’s move seems to suggest the company may bring its ruthless approach to cost cutting to the bricks-and-mortar world of retail. And the company claims it can do that without sacrificing the quality that won the grocer fans in the first place.

“Whole Foods Market continues to maintain the high-quality standards that we’ve championed for nearly 40 years, and with Amazon, we will lower more prices in the future, building on the positive momentum from previous price investments,” Whole Foods co-founder and CEO John Mackey said. “We will continue to focus on both lowering prices and bringing customers the quality they trust and the innovative assortment they expect from our brand.”

‘Seismic impact’

Whole Foods has about 300 U.S. locations and 14 in Canada — mainly in and around Toronto and Vancouver, but also one location in Victoria and one in Ottawa.

Strategy adviser Mark Satov, with Satov Consultants, says it’s less likely the decision will kick off a move to turn Whole Foods into a discount grocery chain, and more likely Amazon is simply using the chain to figure out how a new business works. “They bought it to learn how to be in the food business,” he said.

“I think they’re just experimenting and marketing to draw a few more people into the store,” he added. The store’s price point is still out of reach for most Canadians, but by targeting items that people tend to benchmark prices on — things like fresh vegetables — the chain is hoping to win a few more customers for its more expensive items, too.

“Once you are inside the store, a couple of things happen,” Satov said. “You go and say the milk is $3.69 … I can afford that, and then you’ll buy the freshly ground peanut butter for $18 a tub.”

Whole Foods currently has more than a dozen locations across Canada. (Lynne Sladky/Associated Press)

But Bruce Winder, co-founder and partner at Retail Advisors Network, says the move is a much bigger deal for the hyper-competitive world of Canadian grocery.

“It’s going to cause a fairly seismic impact,” he said in an interview. While he acknowledges the Whole Foods footprint is relatively small in Canada, “it fires a shot over the bow of traditional grocery,” he said.

The move likely won’t cause a flood of people to change their grocery store, he said, but “it’s going to wake up some people to consider a switch.”

If it gets enough of them through the door — and possibly buying new Prime memberships — Winder says it’s worth it.

That’s because most people shop one or two times a week, “and if they can get that customer coming in, invite them into the ecosystem, get them to use Prime — and suddenly you’ve got a strong rewards system there that keeps the customer within the Amazon world,” he said.

And ultimately, anything that causes the rest of the industry to take a look at its own businesses is a good thing for everyone.

“The consumer wins,” Winder said.

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Virtual farmer’s market comes to Ottawa

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Ottawa first-ever virtual farmer’s market has begun delivering food from local farms straight to people’s homes.

Farm to Hand is making it easier for people who cannot access their local farmer’s markets to find local, fresh organic food by bringing ordered food right to their doors. 

“The difference between us and the farmers market is really just the convenience and the on-demandness,” Sean Mallia, the co-founder of the business, told CBC Radio’s In Town and Out.

“[Often times a] person wants to make the purchase but they don’t have the time on Saturdays to go to the farmers market. Everyone wants to eat local … so when it’s easy for them to do it, it just happens.” In Town and Out No time to drive to the farmer’s market but really want to eat local?

Connecting farmers with people 

The online platform allows farmers to list all their own products, and buyers can have the goods delivered. 

“What we really are trying to do is build that connection between farmer and consumer,” Mallia said. “When people fill up a cart … they’re not just filling a cart full of food, they’re filling a cart full of farmers and farms and their stories.”

Mallia said the aim is to connect people to the “vibrant food ecosystem” around them, and to local support farmers.

The virtual market is currently limited to the Ottawa area as a pilot project, but Mallia, 21, said the company is looking to expand.

“[We chose Ottawa because] Ottawa really cares. Ottawa really thinks about local [food] and thinks about sustainability,” he said. “It just made sense to come out of Ottawa.”

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Denley: Stonebridge and Mattamy show compromise is possible over development in Ottawa

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In Ottawa, development proposals too often end up in acrimony and trips to the provincial planning tribunal. That’s why it’s so refreshing to see Mattamy Homes and residents of the south Nepean suburb of Stonebridge work together to resolve a dispute in a way that’s likely to lead to a victory for both sides.

A little over a year ago, Mattamy created an uproar in the golf course community when it announced a plan to build 158 new homes on golf course lands and alter the Stonebridge course to make it shorter and less attractive to golfers. To residents, it looked like the first step in a plan to turn most, or all, of the course into housing.

It’s easy to see why residents were upset. When people pay a premium for a lot backing onto a golf course, there is certainly an implication that the lot will continue to back onto a golf course, but without a legally binding guarantee, it’s no sure thing.

Mattamy’s situation was understandable, too. This is a tough time to be in the golf course business in Ottawa. There are too many courses and not enough golfers so it’s no surprise that golf course owners would find the idea of turning a course into a housing development to be attractive, doubly so when the golf course is owned by a development company.

This is a tough time to be in the golf course business in Ottawa. There are too many courses and not enough golfers so it’s no surprise that golf course owners would find the idea of turning a course into a housing development to be attractive.

In the face of the local opposition, Mattamy withdrew its development application. When things cooled down, the company, the neighbours and the city started to work together on finding a solution that would satisfy everyone.

With the city-sponsored help of veteran planning consultant Jack Stirling, they came up with an unusual idea that will still let Mattamy develop its desired number of homes, in exchange for a promise to operate the course for at least 10 years and redesign it so that it remains attractive to golfers.

At the end of the 10 years, Mattamy can sell the course to the community for $6 million. To raise the money, the community working group is proposing a special levy to be paid by Stonebridge homeowners starting in 2021. The amount will range from $175 a year to $475 a year, depending on property values.

If the deal is approved by a majority of homeowners, Mattamy gets its development and a way out of the money-losing golf business. Homeowners get certainty about no future development. They can choose to keep the course going or retain the 198 acres as green space. It’s not a cheap solution, but it keeps their community as it is and preserves property values.

If a majority of homeowners backs the deal, both the levy and redevelopment will still need to be approved by the city, something scheduled for late this fall.

Stonebridge Community Association president Jay McLean was part of the working group that prepared the proposal and he’s pleased with the outcome. The community’s number one goal was preserving green space, and the deal will accomplish that, he says. Mattamy division president Kevin O’Shea says the deal “gives the community the certainty they are looking for.”

As useful as this deal could be for Stonebridge residents, it doesn’t provide a template to resolve a somewhat similar dispute in Kanata North, where the owner of the Kanata Lakes golf course wants to work with a group of local developers to replace the course with housing. In Kanata, a longstanding legal agreement saying the community has to have 40 per cent open space strengthens residents’ situation. In Stonebridge, there was no legal impediment to developing the whole course.

Golf course communities have become an anachronism in a city intent on intensifying within the urban boundary. Redeveloping those lands for housing is in sync with the city’s planning goals, but it’s not politically saleable to homeowners who thought they had a deal. If it goes ahead, the Stonebridge plan shows there is a reasonable middle ground.

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City eyes five big themes for Ottawa’s new official plan

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As Ottawa maps out its future for the next 25-plus years, city staff propose focusing on five major areas, including the places we live and the ways we move around the capital.

A staff report to the city’s planning committee lays out five themes for future public consultations, before city council finalizes the plan.

1. Growth Management: City staff say Ottawa should focus on building up, rather than out. Staff also suggest the city provide direction on the type of new housing developments, rather than focusing on the number of units in a development, to encourage a wider variety of housing types.

2. Mobility: Staff say the city should encourage active transportation — like walking and cycling — and transit use by better co-ordinating land use and transportation planning. The report also encourages designing streets to better accomodate pedestrians and cyclists, as well as improving connections to the O-Train and Transitway.

3.  Urban and Community Design: Because Ottawa is a major city and the nation’s capital, staff say the design of our city’s buildings and skyline should be a higher calibre to reflect that status. Staff also suggest the city provide high-level direction for better designed parks and public spaces.

4. Climate, Energy and Public Health: Staff say residents’ health must be foundational to the city’s new official plan, with policies contributing to creating more inclusive, walkable, and sustainable communities.

5. Economic Development: Because much of Ottawa’s employment is knowledge-based, the city suggests those employment spaces could be better integrated into neighbourhoods and along main streets and transit nodes, instead of being isolated in business parks. City staff also suggest the city encourage more business incubation and identify opportunities to increase local food production.

The city’s new official plan will map out the city’s growth to 2046. The five themes and the plan’s high-level policy direction will go before the city’s planning committee, next week.

Public consultation and fine-tuning is expected to happen before city council approves the final version of the new official plan in 2021.

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