When Amazon first acquired Whole Foods earlier this year, it was reported as a major scare to the grocery industry because rivals feared that Amazon would dominate the competition. However, as time has progressed, several retailers, including Target, have found a way to stop Whole Foods from continuing to expand its reach: legal fine print.
Photo: Mike Mozart on Flickr
When major retailers enter into leasing agreements, they often include language in their contracts designed to keep their largest competitors from being able to fully develop or even own space in the same building. An investigation by Reuters found several examples of this legal fine print that could be utilized to stop Whole Foods.
For example, a Target located in San Francisco’s City Center Mall stalled Whole Foods’ entry in the same building. It was done through clauses in their original contract that prevent pick-up lockers for goods ordered online from appearing in new tenants’ locations. Thus, Whole Foods would have to concede their Amazon locker availability if they want the space.
In Manhattan, several big box retailers have clauses that prevent Whole Foods from selling several items in Amazon’s inventory, including electronics and and linens, that they sell themselves. Other such clauses in other leases can include the prevention of pickup services or even naming competitors barred from opening stores in the same building.
Currently, Whole Foods owns 473 stores and plans to add 85 more. However, the Amazon-owned grocer will be facing many challenges to get into its new spaces based off of these leasing agreements, a new challenge for a technology-based company that’s making its first foray into brick-and-mortar. The full extent of these challenges is hard to determine, since lease deals vary based on the mall or location of particular stores and many are kept private.
Nonetheless, consider Amazon’s takeover of retail grocery via Whole Foods to be at least somewhat impeded… for now.