23 June, 2017
Amazon's $13.7 billion deal for Whole Foods sent grocery stores, big retailers, and food makers and distributors plunging Friday.
A crowded local grocery market became more interesting - and probably more competitive - as online retail powerhouse Amazon announced Friday that it will buy organic foods specialist Whole Foods, which now has stores in Washington Twp., Mason and Cincinnati.
After the announcement, Amazon's shares went up more than two percent and Whole Foods Market shares went up by about 28%.
Last Friday, when Amazon announced the acquisition, shares of Walmart as well as Target, Kroger, and Costco all tumbled.
Any number of Whole Foods locations - more than 460 in the U.S., Canada and Britain - could be used as jumping off points for wider delivery and pickup of groceries and prepared foods ordered online.
Amazon and Whole Foods expect to close the deal during the second half of 2017. Whole Foods whose fleet of stores now numbers 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. 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.
Mackey will remain CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin.
It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.
Amazon is expected to thoroughly transform Whole Foods Stores, expanding them beyond being grocery stores to integrate them into their broader operations, perhaps including technology retail, and online-purchase ability.
Meanwhile, Whole Foods stock soared on the news, jumping almost 30 percent by mid-morning.
The deal prompted a round of jokes on Twitter, with commentators poking fun at Amazon's drone and artificial intelligence technology and numerous riffs on prices at a store dubbed "Whole Paycheck".
Kristin Mullins, president and chief executive of the Ohio Grocers Association, said her first question about the Whole Foods acquisition was: What does the move mean for the number of traditional "brick-and-mortar" physical stores in Ohio? It had previously announced plans to open a 1,800-square-foot store called Amazon Go in Seattle, Washington. 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. When they take something off the shelf and put it in their cart, it registers in their account.
"Retweet if you've also spent $13 billion at Whole Foods", quipped the comedian Chelsea Handler.
Companies like Wal-Mart Stores and Target have had success with "click and collect" programs, where customers order goods on their cell phone and pick them up curbside. This will help Whole Foods have an online delivery presence. CEO John Mackey will also retain his job.
