Amazon to purchase Whole Foods for US$13.7 billion

Amazon to purchase Whole Foods for US$13.7 billion

Amazon said on Friday that it would buy Whole Foods for $13.7 billion.

The deal shows Amazon's interest in moving into the business of operating traditional brick-and-mortar stores, even as many retailers that have been crippled by Amazon's growth have announced a series of store closings.

Given that desire to disrupt, other bidders may try to make Amazon's Whole Foods purchase more expensive or opt to eliminate its entry into the space altogether.

"The conventional grocery store should feel threatened and incapable of responding", Pachter said.

The deal has the possibility to be "transformative", Moody's lead retail analyst Charlie O'Shea said in a note, "not just for food retail, but for retail in general".

According to Michael la Merced and Nick Wingfield of The New York Times the Amazon deal marks an ambitious push into the mammoth grocery business, an industry that in the United States accounts for around $700 to $800 billion in annual sales.

Whole Foods, which opened its first store in Austin, Texas in 1980, now has 465 stores across North America and the UK.

But it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978. Adding Whole Foods Market to its arsenal provides both a fulfillment source and pickup spot for online grocery orders for Amazon, giving customers the option to enroll in a delivery service like Prime Fresh or pick up orders for free, like with Wal-Mart's model.

Whole Foods has received a lot of pressure from key investors, resulting in a shake-up in management. It was available through Whole Foods's app.

Supermarket shares slumped on the merger news, with Target dropping by 12 percent, Kroger by 14 percent, and Walmart by nearly 6 percent.

"Amazon has the best loyalty program in retail in the world", said Michelle Grant, the head of retailing at the market-research firm Euromonitor International.

Here's a look at some of the big moves in the stock market following news of Amazon's acquisition of Whole Foods Market. "All Amazon's got to do is grow". The deal could put Whole Foods in a position to dominate two areas that grocery stores have been focusing on to gain new customers and increase revenue -convenience and high quality organic food, says J.P. Eggers, an associate professor at NYU Stern who focuses on tech and retail.

But if you rely on the startup Instacart for Whole Foods delivery, some changes may be on the way.



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