Amazon to buy Whole Foods Market in deal valued at $13.7 billion

Adjust Comment Print

John Meyer, a portfolio and security analyst, said a "price war" between brick and mortar stores is already occurring.

-Amazon. Investors like the deal and think it will be good for the online retail giant, which has been expanding its grocery offerings.

Whole Foods has posted seven straight quarterly sales declines at established stores and recently overhauled its board of directors in the face of pressure from activist hedge fund Jana Partners LLC.

And while department stores, electronics chains and other retail sectors have been closing stores, the number of grocery stores has continued to grow. The deal now gives Amazon control of those 431 stores, almost all of which are in neighborhoods that are more affluent and younger than America as a whole.

Shares of competing retailers Kroger Co., Target, and Walmart all fell Friday after the deal was announced, while Amazon shares were up by 2.4 percent. Walmart, which has the largest share of the US food market, has been working on lowering prices, while Target has been struggling to turn around its grocery business.

But once the deal is complete and WFM is wholly in the Amazon fold, quite a bit is expected to change - and not just on the grocery front.

Since its founding 23 years ago, Amazon.com has upended the business of selling books, music and just about everything else we consume - except food.

Who has the authority to sack Robert Mueller?
She, further, insisted that Sessions should fire Mueller, now that the President is not under investigation. Deputy White House press secretary Sarah Huckabee Sanders said simply: "Chris speaks for himself".

Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs.

Despite Amazon's reputation for harnessing technology, a prototype store inside its corporate office in Seattle, called Amazon Go, which uses sensors and tech-savvy cameras to detect shoppers' selections and then charge their Amazon accounts, has rolled out more slowly than planned, a person familiar with the matter said. Shoppers simply pick the items they want off the shelves and leave the store.

With this strategy, Amazon is planning to make the prices competitive and attract "more low- and middle-income shoppers" to its retail stores, which may still be located in posh localities.

Hetu said Amazon isn't likely to bring that to Whole Foods right away but could deploy pieces of it to further cut costs.

Drew Herdener, an Amazon spokesman, said in a statement the company has "no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned".

Whole Foods sent a letter to customers after the merger announcement, calling the agreement a new chapter in Whole Foods' history and an incredible opportunity. However, Whole Foods does not have access to Instacart's financial numbers and analytics. Or someone who buys granola bars monthly from Whole Foods and paper towels every other week from Amazon might be offered the items in a single shipment, delivered to the door.

"Dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks", O'Shea said. "This deal gives them credibility with consumers and a major foothold in that space".

Comments