Whole Foods cafes are falling victim to Amazon’s delivery strategy
The grocery store's transformation is another indication that distribution centers are taking over prime retail locations.
Maybe because supermarkets are such a quintessential suburban form, they’ve always had trouble fitting into the city. Even when they are designed with windows facing the street, the management usually ends up covering up the view with advertisements or stacks of boxes. So when Whole Foods’ Fairmount store adopted a more congenial stance in 2016, Philadelphians applauded.
Not only did the megastore feature a 200-foot wall of windows along Pennsylvania Avenue, it filled that sunny ground-floor space with a sleek coffee bar. The cafe served as a warm-up area for shoppers, giving them a place to rest and refuel before hitting the grocery-aisle obstacle course on the mezzanine. It wasn’t long before the coffee bar became one of those beloved and buzzy “Third Places” (after home and work), where customers and locals could serendipitously bump into familiar faces.
But Amazon, which owns Whole Foods, is no longer interested in having you hang out in that cafe. Two weeks ago, the company ripped out the Allegro Coffee Company’s long white counter, tossed the stylish midcentury lounge chairs, and packed the space with as many refrigerators and shelving units as it could hold. Whole Foods’ high-ceilinged ground floor is now a storage area for the chain’s growing delivery business, and the big windows are obscured by brown bags of groceries.
Cafes come and go all the time, of course. And you can still find a small cafe and places to relax at the cluster of eateries on the Whole Foods grocery floor. Yet the reallocation of the store’s valuable ground-floor space — from people-centered retail to a product-centered distribution area — is a harbinger in the supermarket business. It may be that the brief moment of quality urbanism represented by the Whole Foods cafe is already over.
The change in priorities isn’t limited to Whole Foods. After decades of bemoaning its food deserts, Philadelphia, like many big cities, now finds itself flooded with new supermarkets. Giant, the Carlisle, Pa.-based food chain, is busy ringing Center City with megastores. Aldi, Sprouts, Save-a-lot, along with Giant’s neighborhood-scaled Heirloom Market, are grabbing whatever real estate they can find, joining Philadelphia stalwarts like Acme and Thriftway. It looks as if a supermarket war is underway.
These are not supermarkets as we once knew them. The survivors will end up as hybrids, part retail, part distribution center, according to Brittain Ladd, a supply-chain consultant who previously helped Amazon craft its grocery-delivery strategy.
Giant already is setting up the perfect distribution network for deliveries, with new stores coming to key locations on the fringes of Center City: Columbus Boulevard in Pennsport, Broad and Washington, and the Schuylkill waterfront in the Logan Square neighborhood. According to a housing developer who asked not to be identified, Giant has been in talks for a fourth downtown location.
We should have seen this coming. We now have everything else delivered, why not food?
Initially, people resisted the idea of buying groceries online, Ladd told me, because they still like to “inspect and select” their food, especially perishable items like fruit, vegetables, and meat. But the comfort level has been growing, particularly as supermarkets reduce their delivery times.
Two years ago, only 1.5% of all supermarket customers ordered groceries online. Today, it’s 5%. By 2025, Ladd predicts that 20% of customers will have their food delivered to their homes.
By turning its Fairmount cafe into a staging area for deliveries, Whole Foods is positioning itself for the coming competition. Both the Wynnewood and Cherry Hill stores also have removed tables in their cafes to create room to store prepacked groceries. Amazon promises to get your groceries to your door in under two hours, at no cost for Prime members.
What could those increased deliveries mean for cities?
Until now, most food distribution warehouses have been outside of urban areas, usually close to highways. But as competition among the supermarket chains heats up, Ladd says that chains will start to move their supply networks closer to their customers.
Amazon did not respond to requests for comment, but that strategy would explain why the company turned a handsome former factory in a residential area at 41st and Chestnut into a distribution center. Ladd predicts that some of its smaller stores, such as the Whole Foods at 10th and South (what I call the “bodega Whole Foods” because it’s so small), could end up being used exclusively as warehouses. If that happens, it would leave a dead zone in the middle of a pedestrian-friendly city block.
Right now, we’re in a transitional period. Even though most customers still go to the store for their groceries, supermarkets have become crowded with hired pickers, who roam the aisles to fill online orders.
“It’s the absolute worst idea,” Ladd says. “People hate going to the stores because they block the aisles.”
Ultimately, Ladd believes, supermarkets will stop selling anything besides perishable items. You might go to the grocery for a bag of greens or a fresh chicken, but things like canned goods, snacks, and paper products will be delivered. To make room for storing those items, supermarkets will start jettisoning more than just cafes.
We can already guess what the increase in deliveries will mean to Philadelphia’s already congested streets: more traffic, more blocked buses, and interrupted bike lanes. One possible compensation: Fewer people will need to drive to the supermarket.
It’s not too soon to start planning for a time when nearly all our goods are brought to us, instead of the other way around. Many new supermarkets are being designed with massive parking structures. The garage attached to the new Giant on 23rd Street is a five-story-high fortress sheathed in blank walls. There should be a way to design such spaces so they can be repurposed later as housing when that parking becomes unnecessary. (Of course, there are probably too many spaces now.)
But maybe the biggest concern is the way an all-delivery economy will change the way we interact with one another. In a recent essay, New York Times columnist Ginia Bellafante bemoaned the decline in small talk at her local Starbucks that has accompanied the introduction of an app that lets customers order remotely.
Honeygrow, Philadelphia’s homegrown fast-casual restaurant, recently started installing ordering kiosks in local offices around the city. Place your lunch request by 11 a.m., it will be brought to your lobby by noon. That’s one less reason to venture into the world.
By the way, Ladd also predicts a big shakeout in the number of fast-casual restaurants as more chains establish remote “cloud kitchens,” where food is prepared off-site for deliveries. Those fast-casual chains have been giving life to the empty space left by retailers, who were done in by e-commerce.
There is no doubt that delivery services are a huge time-saver in our busy lives. But when we have fewer reasons to venture among people we don’t know, or who are different from us, what will keep us from hunkering down in our silos even more than we do now? A small cafe may be more than a place to buy coffee. It could be the lifeline of our democratic society.