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How grocers feel about Amazon: 'There was a lot of fear before, there's a lot more fear now'

When Amazon announced its intention to buy Whole Foods last month, the news shook brick-and-mortar grocery retailers—and digital grocers, as well.

The deal “confirms that big institutional retailers are in serious trouble,” says Gunnar Lovelace, founder and CEO of Thrive Market, an online-only grocery store that sells only healthy, non-GMO products. “I think this is Blockbuster vs Netflix. For traditional retailers, there was a lot of fear before… and I think there’s a lot more fear now.”

Thrive, on the other hand, might just emerge unscathed from Amazon’s grocery invasion, because Thrive “never set out to out-Amazon Amazon,” Lovelace says. “Amazon has half a billion products on the catalog; we’re a highly curated community of 5,000 products. So we speak to the values of the health-and-wellness consumers in a way that Amazon just can never do.”

Thrive launched one year ago, and has raised $160 million in funding.

Thrive Market CEO Gunnar Lovelace at a Fast Company conference in May 2016 (Getty)
Thrive Market CEO Gunnar Lovelace at a Fast Company conference in May 2016 (Getty)

In an era when it’s difficult to think of a business that Amazon would not want to get into, Thrive is on to something: there’s power in finding a niche. Thrive’s niche is health-conscious shoppers, who have “a real desire for authenticity and transparency,” Lovelace argues. That’s why Thrive promotes values like its social mission, advocacy work, and fair trade.

Thrive makes its own products, but also sells products from a number of socially-conscious brands like Earth Circle Organics, Vigilant Eats, Artisana, Divina, Nutiva, Yumbutter, and Justin’s, to name just a few. And these days, many of those types of brands are selling themselves to large corporations. Big Food, like Coca-Cola, Pepsico, and Mondelez want these upstart brands in their portfolio to retain the health-conscious consumers they’re losing.

But when the upstarts sell, do they lose some of their cred?

Lovelace says no: “I think the DNA of these positive, socially conscious, progressive companies actually goes and infects the mothership.” He cites the example of General Mills buying Annie’s in 2014, for $800 million. He believes that Annie’s has “infected General Mills” with their values.

Daniel Roberts covers tech and retail at Yahoo Finance. Follow him on Twitter at @readDanwrite.

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