Jana Partners, an activist investor, has accumulated a nine-percent stake in Whole Foods. It is pushing for major reforms, including -- it is reported -- significantly increasing in-house procurement and distribution.
Currently Whole Foods self-manages much of its coffee, bakery, seafood, and other perishables, while contracting with United Natural Foods for dry goods and frozen. According to several media reports, Jana is focused on reducing the grocery retailer's dependence on its wholesaler/distributor.
Suggests to me that Jana doesn't know much about grocery. Whole Foods operates fewer than 500 stores. That's really not much market leverage. The cost -- financial and strategic -- of establishing the procurement and distribution capacity would be significant... and that this would actually create any comparative advantage seems very unlikely... more likely producing disadvantages.
For more see: New York Times, Reuters, and CNBC.
Much more interesting -- at least to me -- are rumors that Amazon has been looking to purchase Whole Foods. There's a play worth trying to work out on the chalk-board.
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