Amazon Buys Whole Foods for $13.4 Billion

Whole Foods CEO John Mackey says the company will evolve under the management of Amazon. The Motley Fool owns shares of and recommends Amazon, Costco Wholesale, and Whole Foods Market. In line with the acquisition, Whole Foods CEO hosted a town hall meeting with its employees.

Still, Whole Foods has hundred of stores close to the affluent customers Amazon targets for its Fresh program.

Questions are being raised about how Amazon's ownership may change staff numbers, wages and shelf prices at Whole Foods - including at its nine United Kingdom stores - given the online retail giant's interest in using in-store technology to ramp up automation.

Speculators expect that competitive bidders would either try to win the bidding war by quoting a higher amount or at least make an attempt to make this a costlier deal for Amazon so that it doesn't hamper the overall grocery market. "That's their dilemma", said Roger Davidson, who oversaw Wal-Mart Stores Inc's global food procurement and now is president of Oakton Advisory Group.

Since then, executives have made numerous comments hinting at future disruption, including private label groceries and big changes to stores.

One of the more interesting facets of the deal worth further exploration is Amazon's plans for the Whole Foods brand.

While the potential deal has ratcheted up uncertainty for Whole Foods and its workers, it's clear that something needed to change.

Amazon could begin experimenting with some version of the "Just Walk Out" technology in Whole Foods, and the company will likely look to make the checkout process more seamless.

Whole Foods' website said it only sells products "that are free of artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats". The unknowns include whether Amazon might change the grocery chains food offerings, which now include thousands of products from small and mid-sized businesses.

John Mackey, CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.

"I don't think it's a coincidence that they're targeting these specific, highly affluent customers", said Mark Elfenbein, chief revenue officer at artificial-intelligence firm Sentient Technologies LLC, which works with retailers to better match the in-store shopping experience online. Its prices online change constantly to react to competitor moves and other factors like supply and demand, and the company often prices popular items competitively to create the perception that everything it sells is low-cost. Mackey said that culture change is inevitable, but it's not a bad thing.

"They (Amazon) already have our gift boxes".

However, in addition to wanting to select their own fresh food, many consumers simply enjoy shopping for groceries in a brick-and-mortar store, saying that walking the store reminds them of what else they need, or reveals new products to them. The Motley Fool owns shares of and recommends Amazon and Whole Foods Market.

At the center of many conversations is FreshDirect, sources said.

But because of the growing number of retailers courting the natural and organic food shopper, some food companies are bypassing Whole Foods.

  • Eleanor Harrison