Amazon buying Whole Foods in bold move into brick and mortar
- Author: Eleanor Harrison Jun 17, 2017,
Jun 17, 2017, 7:38
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. John Mackey, Whole Foods' outspoken co-founder, will continue to run the business - providing a lifeline to the embattled executive after a fight with activist investor Jana Partners.
Whole Foods, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods. "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - and they're doing an unbelievable job and we want that to continue".
Clint Davis covers entertainment and trending news topics for the Scripps National Desk. "That is the reality today at Amazon, and it will no doubt become the reality at Whole Foods".
Ripple effect: If 20 million Amazon Prime members agree to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million customers traditional supermarkets lose, said Moody's lead retail analyst Charlie O'Shea. While it's true that many companies Amazon has acquired have continued to operate independently, it's hard not to wonder whether we'll start seeing Kindles and Amazon Echos popping up at Whole Foods.
The Canadian grocery sector has always been considered a bit of a laggard compared to the US when it comes to e-commerce and delivery services.
Adding to the potential threat, Amazon is known for offering discounts and it's likely to encourage more aggressive pricing at Whole Foods, Michelle Grant, head of retailing at market research firm Euromonitor International, said in a statement. And it should be able to bring cost-cutting technologies, such as robots to move inventory around, while the company gets a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs. Shoppers simply pick the items they want off the shelves and leave the store. Wal-Mart, Target, Costco and Kroger's shares have fallen by 13% as of this morning. "It's exciting to see some more substantial moves".
The transaction will need to get the seal of approval from Whole Foods Market's shareholders. Whole Foods' headquarters will still be in Austin. Here are details on both companies and more about the deal, which will close in the second half of this year. That could change if Amazon not only cuts operational costs but passes those savings onto customers.