25 June, 2017
Amazon has been eyeing stores that could allow traditional in-store purchases, online ordering with on-site pickup and home delivery, using the stores' warehouses as distribution points.
Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general".
The acquisition is seen as a move by Amazon to more aggressively target the grocery section of retail has proven more stubbornly resistant to digital channels. Amazon is paying $42 per share for Whole Foods, which is a 27 percent premium from Thursday's night close.
Set up in 1978, Whole Foods, whose stores now span more than 430 locations, has found it hard to attract more mainstream consumers as Walmart and other large chains have stepped up their sales of natural and organic products. For 10 years, the company has offered a type of food delivery service via Fresh, but that simply won't do, it seems.
Amazon says in a statement that it has "no plans to use the technology developed for Amazon Go to automate the jobs of cashiers at Whole Foods". He plans to streamline the company's operations, slash down the huge 87,000 headcount and also lower the prices of the complete inventory. The app would then have automatically charged whatever products they took out of the store with them to their Amazon account.
But Stone expects that Amazon might find a way to integrate some of the systems found at the GO store. It was recently granted a patent for technology that would block shoppers from comparing prices using their mobile devices while they are in stores. Whole Foods Market, which has more than 420 stores in more than 40 states in the US, soared more than 29.1 percent to $42.68.
"This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail", said Mr Paul Cuatrecasas, chief executive of Aquaa Partners, a London-based investment banking firm, in an e-mail. The company is slowly building a fleet of outlets, cementing its supermarket dreams. Walmart, which has the largest share of the USA food market, has been working on lowering prices, while Target has been struggling to turn around its grocery business. These three have begun offering some of what Whole Foods offers, forcing the supermarket chain to cut prices.
Wal-Mart was just one of the many retailers whose stocks were impacted by the news that Amazon is acquiring Whole Foods.
