Shoppers may see big changes after Amazon buys Whole Foods

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

Marc Perrone, head of the United Food and Commercial Workers International Union, which represents millions of grocery workers, said that Amazon's "brutal vision for retail is one where automation replaces good jobs". The company is known for its organic produce and other health products. In the fiscal year 2016, the Company had sales of approximately $16 billion and has more than 460 stores in the United States, Canada, and the United Kingdom.

In Whole Foods, Amazon is acquiring a company that has recently come under pressure from investors for its lagging performance.

June 16 A decision by Goldman Sachs Group Inc past year to move an investment banking veteran to Seattle, as well as Evercore Partners Inc's hiring of a top banker defending companies against activist investors, has paid off handsomely.

Whole Foods, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods.

The Amazon-Whole Foods combination could put even more pressure on those chains and other big grocery sellers. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods. Whole Foods was, however, costlier in 1992 as compared to today (keep the times in check) and it has been reducing the prices to keep the sales in check.

Amazon could cut costs if the technology gets good enough to deploy at Whole Foods locations.

The Amazon Go pilot store allows customers to choose items and then pay the bill automatically by just walking out of the store, all without going to a cash register.

Customers who visit the store use an accompanied app that enables them to pick any item of their choice, and walk out without stopping at the cashier section.

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. "It's probably like the ideal match right", Whitney Winchester said.

"The losers? Just about every traditional grocer", Lempert said in a note, "and companies like Instacart, who built their business on Whole Foods". Anderson advised Whole Foods alongside senior Evercore bankers Eduardo Mestre and William Hiltz.

"This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers", John Mackey, Whole Foods Market co-founder and CEO, said in a shared release with Amazon. For customers, this could mean better prices and delivery options.

"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.

RICH TARRANT: Consumer purchases in a grocery space is, you know, $600-billion industry that has yet to be massively disrupted by online.

  • Eleanor Harrison