Fears of Amazon competition might kill San Francisco's eighth Whole Foods location before it even has a chance to open its doors, as the battle between big box and online retail spills onto the grocery chain's floors.
The fight is in San Francisco's City Center Mall, the shopping complex at the southeast corner of Geary and Masonic Boulevards. Since its opening in October of 2013 in the old Sears/Mervyn's space (as always, reference point dependent on length of SF tenure), Target's been City Center's largest tenant — and as such, Reuters reports, the big boxers have a say on who their neighbors at the mall shall be.
That means when the adjacent Best Buy closed last month, Target was already poised to block the new tenant eyeing the space: yet another San Francisco location of the Amazon-owned Whole Foods Markets, the city's eighth.
The reason for Target's opposition is, Reuters reports, "it feared competition from the grocery chain’s new owner, Amazon.com Inc."
The two companies have been in talks over the turf since this summer, Reuters reports, but "Early attempts to persuade Target failed, and Whole Foods may now have to concede certain Amazon initiatives - such as lockers where customers can pick up goods ordered online - if it wants the location."
Before you roll your eyes and blame some arcane San Francisco law for the holdup, Reuters says that this isn't just a 415 flap:
Across the United States, large retailers including Target, Bed Bath & Beyond Inc and Best Buy Co Inc have legal rights in many lease agreements that allow them to limit what Amazon can do with nearby Whole Foods stores, and where it can open new ones.
Documents reviewed by Reuters show bans on Amazon lockers and delivery operations near a Target store in Illinois and also in Florida, where a new Whole Foods is set to open. Lockers for retrieving online orders are a way for Amazon to spur sales through the grocery chain.
In Manhattan and other locations, the leases of Whole Foods’ big box neighbors bar it from selling a range of goods that Amazon has in its massive online inventory, from electronics to toys and linens.
Talks between the retail Goliaths are "ongoing," Reuters says. In a written statement, Target tells Reuters that “It’s inaccurate to characterize lease agreements as our corporate strategy," but that the company is “focused on what’s best for the company and delivering on the reasons our guests love Target. Our more than 1,800 stores across the country are a strategic asset and a vital part of Target’s future.”
That said, it might come down to San Francisco's Planning Commission to give Whole Foods -- and therefore, Amazon -- the green light to set up shop next to the big red circle. (And, one should note, just catty-corner from Trader Joe's.) Though SocketSite says that "a formal application to allow the move has yet to be filed with Planning," Whole Foods spokesperson Erika Dimmler tells SF Gate that "the grocery chain has a lease for the Geary and Masonic location and is still planning to open a store there," with the matter to be discussed at the Commission's December 7 meeting.
Update: Never mind that last paragraph! Dimmler reached out to SFist to say that she "thought we were discussing a different site" when she spoke with SF Gate, and that "there is no planning commission meeting or lease agreement for city center" for Whole Foods.