Western Real Estate Business

OCT 2017

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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52 • October 2017 • Western Real Estate Business www.REBusinessOnline.com the Tesla Gigafactory (but ultimately lost out to Reno/Sparks, Nev.). "Tucson can play at this level," says Fletcher McCusker, chairman of the Rio Nuevo Revitalization District. "We just wanted to make sure our friends in Seattle noticed us, and pro- vide a good home to our landmark cactus, which I expect will become Seattle's biggest tourist attraction." Though the RFP deadline hasn't even passed as of press time, you have to give the West credit for its can-do attitude and entrepreneur- ial spirit that's led so many officials to feel confident their city's borders hold the key to success for the next big $5 billion investment. And Tuc- son? Well, you have to give Tucson extra points for creativity. n Whole Foods plans to lower prices on fair-trade bananas, organic avoca- dos, organic baby kale and baby lettuce, and organic Gala and Fuji apples, among other products. Tucson, Ariz., one of the Western cities vying for Amazon's HQ2 space, already has an Amazon-affiliated presence in the neighborhood. Its local Whole Foods Market is at 5555 E River Road. Amazon's new headquarters pursuit doesn't mean the company has turned its attention away from retail. In fact, it's focusing very closely on its new brick-and-mortar venture: the $13.7 billion acquisition of Whole Foods Market. The first order of business for the e-commerce giant is making the Austin-based grocer's high-quality and organic food more affordable for its shoppers. Whole Foods Mar- ket now offers lower prices on selected gro- cery staples across its stores, with more products to follow suit shortly. These early low prices include fair- trade bananas, organic avocados, organic large brown eggs, organic salmon and tilapia, or- ganic baby kale and baby lettuce, animal- welfare-rated 85 per- cent lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken and organic butter. "We're determined to make healthy and organic food affordable for every- one," said Jeff Wilke, CEO of Amazon Worldwide Consumer, in a statement. "We will lower prices without compromising Whole Foods Market's long- held commitment to the highest standards." Other grocers are watching closely as Whole Foods transitions to the new model, says Rick Scardino, principal of Lee & Associates' Chicago office. "Most grocers will be concerned for obvious reasons as to Amazon's plan to lower pricing because that will shrink already tight margins in the gro- cery segment," he notes. Pricing has become a key weapon in the ongoing grocery wars across the country. Grocers like Walmart Neighborhood Market is making price adjust- ments to compete with expanding discount grocers like Aldi and Lidl. "Lower prices always have the potential to disrupt mature sales chan- nels such as the domestic grocery business," says Jeff Rinkov, CEO of Lee & Associates. "Existing grocery chains are paying close attention [to Whole Foods], and we will see enhancements in their models and shopping experi- ences to keep pace." High-Tech Makeover Amazon and Whole Foods Market's technology teams will begin to inte- grate Amazon Prime into the Whole Foods point-of-sale system, whereby Prime members will receive special savings and in-store benefits. The two companies will invest in additional areas over time, including merchandis- ing and logistics, to lower prices even further for customers. "It's been our mission for 39 years at Whole Foods Market to bring the highest quality food to our customers," said John Mackey, co-founder and CEO of Whole Foods Market, in a statement. "By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people." Whole Foods' private-label products — including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch — will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. Amazon Lockers will also be available in select Whole Foods Market stores. Customers can have products shipped from Amazon.com to their local Whole Foods store for pick up or send returns back to Amazon during a trip to the store. In fiscal year 2016, Whole Foods had sales of approximately $16 billion and has more than 460 stores in the United States, Canada and the United Kingdom. The grocer employs about 87,000 team members. — Matt Valley and John Nelson AMAZON'S PURCHASE OF WHOLE FOODS MEANS LOWER PRICES Tucson, Ariz., one of the Western cities vying for Amazon's HQ2 space, already has an Amazon- affiliated presence in the neighborhood. Its local Whole Foods Market is at 5555 E River Road. Tucson officials are confident in the city's ability to attract Amazon, noting they secured Caterpillar's new Surface Mining and Technology Division headquarters and were in the running for the Tesla Gigafactory (pictured above), but ultimately lost out to Reno/Sparks, Nev.

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