Amazon buying Whole Foods, making strong move into groceries

Amazon buying Whole Foods, making strong move into groceries

It remains to be seen if Google will look for more food store partners.

News that internet retailer Amazon is ponying up $13.7 billion to buy grocery chain Whole Foods has resulted in billions of dollars worth of stock value damage in the retail and food categories. Amazon is all about technology, and it's very likely that technology will be applied to the Whole Foods shopping experience. Whole Foods Market, which has more than 420 stores in more than 40 states in the USA, soared more than 29.1 percent to $42.68.

In the US "this adds 440 refrigerated warehouses within 10 miles of probably 80% of the population", said Michael Pachter, an analyst for Wedbush Securities.

"The ramifications for all of retail are seismic - not just retailers that sell grocery, but for everyone", Chuck Grom of Gordon Haskett said. Target and Walmart were each down 5 percent. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.

Whole Foods may offer fewer jobs going forward if Amazon takes it over.

Expanding into the grocery market would not only bring profits to Amazon but a room for great expansion. In the first quarter this year, food-and-drink sales at American brick-and-mortar stores were down by nearly $3 billion even as grocery trips rose, according to market research firm Nielsen. It could also put pressure on other stores to lower their prices as well, he says.

"Make no mistake, Walmart under no circumstances can lose the grocery wars to Amazon", said Brittain Ladd, a strategy and supply chain consultant who formerly worked with Amazon on its grocery business.

As sales have slumped, Whole Foods executives have tried to highlight what distinguishes it from rivals.

Completion of the transaction is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other customary closing conditions.

Now Amazon will take on grocers like Wal-Mart and Kroger.

Fresh foods are the final frontier for Amazon.

A veteran of Drexel Burnham - the investment bank that became famous for leveraged buyouts in the 1980s - Sokoloff joined Whole Foods board in 2008.

New competition from Amazon will "exert margin pressure on everybody else and force everybody to be innovative and consolidate", Agnese said.

In an email to customers titled "exciting news", Whole Foods vowed to keep quality high.

Analysts viewed the deal with Whole Foods as a seismic event for the sector. Amazon is experimenting with a store in its Seattle hometown where customers will buy groceries without even having to go through a checkout line, using an app and computer vision. "If shoppers are going to allow a company, a retailer, to pick their meat, their produce and their seafood, Whole Foods is probably at the top of the list of retailers with the best reputation across the country".

So news that Amazon has bought U.S. supermarket chain Whole Foods for $13.4bn is interesting but perhaps not surprising.

"Instead of deliver to my home, why not just come down here?"



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