The Nordstrom family’s June 8 decision to look into taking the retailer privateappears remarkably well timed given Amazon.com Inc.’s Friday announcement that it plans to buy Whole Foods Market (Nasdaq: WFM) for $13.7 billion.
The effects of what would be Amazon’s (Nasdaq: AMZN) largest acquisition to date are uncertain. Perhaps Prime members will get discounts on pricey prosciutto and organic produce at the grocery store. This, in turn, would make the $99 Prime annual membership fee more palatable to Whole Foods shoppers who are not currently Prime customers.
In the eyes of Seattle retail consultancy Outcalt & Johnson, the acquisition of Whole Foods is largely about boosting Prime membership, which keeps customers coming back to Amazon. It also shows that Whole Foods is, for the first time, getting into what Pat Johnson says is “real retail,” going well beyond Amazon gradually opening brick-and-mortar bookstores, including announcing plans last month for store No. 10 in Bellevue.
“The (Amazon-Whole Foods) relationship is very simpatico,” Johnson said, because of both companies’ focus on customer service.
She said Amazon appears to be thinking, “if we are going to be getting more into brick-and-mortar retail, we should learn from the people who know about in-store customer service.”
That could lead Amazon to acquire another struggling high-end retailer known for top-notch customer service: Seattle-based Nordstrom (NYSE: JWN), whose headquarters are just down the street from Amazon’s, though Nordstrom representatives have indicated that’s not their plan.
Like Whole Foods, Nordstrom is a high-end retailer that’s struggling due largely to Amazon’s online retailing prowess.
To Johnson’s business partner, Dick Outcalt, the decision last week by the Nordstrom to consider going private augurs Amazon’s intent to acquire Nordstrom. He even thinks Nordstrom family members might have been thinking about this when they announced they are looking into going private. Doing so would remove the spotlight from plans to sell to Amazon.
It would be sad to loyal Nordstrom employees and customers to see the proud, 116-year-old company sold to upstart Amazon. Yet it also would make sense, given how Amazon is pushing into apparel and bringing traditional retailers to their knees.