26 June, 2017
For those in the love-it camp, like Shea Stevens, these are anxious times. However, Amazon's $13.7 billion acquisition was a surprise to some. Amazon has an obvious ability in e-commerce, but retailers such as Wal-Mart and Target have recently aggressively stepped up their digital efforts. The company has over 4,000 stores compared to around 400 for Amazon, and that's a big advantage if Walmart can move quickly and take advantage of the "last mile" and getting those products from the store to consumers' homes.
As sales declined at established locations, Whole Foods recently said it was hitting the brakes on expansion and that it no longer saw potential for 1,200 locations.
The deal is being called a "game changer", as Amazon takes over Whole Foods, for almost $14 billion dollars. "They spent about a decade trying to crack the code on fresh food". And buying Whole Foods would give Chief Executive Officer Jeff Bezos a ready-made cadre of customers. He expressed some unease about the deal.
"All stores are not going away, it's just a matter of finding the store/online equilibrium", Credit Suisse analysts said in a note.
Over the years, critics of Whole Foods sardonically coined the nickname "Whole Paycheck", highlighting the steep prices of its high-end, organic fare.
Whole Foods has already experimented with new formats, including its smaller 365 stores aimed at winning over millennials, who have migrated more to urban areas and tend to be more cost conscious than previous generations.
"We do think our partnership with Amazon is gonna help us do that more skillfully and, hopefully, faster".
And Whole Foods shares climbed 29 percent to $42.68 Friday - more than the $42 deal price - indicating investors expect another bidder may emerge.
It may not be evident on the surface but Amazon's buyout of Whole Foods could mark the Seattle company's next big step in automating how we buy things.
"Very few entities could outbid" Amazon, Short said.
Based on a similar premium to that applied in the Whole Foods deal, Turner suggested that a price of $55 a share for GrubHub "is well within the realm of possibility".
Pachter said Amazon was likely to increase spending to build its online grocery business over the next several years, so the acquisition would add only slightly to earnings while boosting revenue significantly.
Elise Bauer, a food blogger in Sacramento, California, lives about five minutes from a Whole Foods store and shops there several times a week. Amazon clearly wants to do to supermarkets what it did to bookstores. The 35-year-old Army aviator, who's stationed at nearby Hunter Army Airfield, said for non-persishable items - and for other products when she's busy - she relies on the mobile app Shipt, which for $100 per year allows her to schedule home delivery of groceries from the local Publix.
