26 June, 2017
Amazon is once again shaking up the retail sector, with the announcement Friday it will acquire upscale United States grocer Whole Foods Market, known for its pricey organic options, in a deal that underscores the online giant's growing influence in the economy.
He didn't use that phrase per se when describing the deal to employees at a town hall on Friday, but he might as well have: If you read the transcript of his remarks, which Whole Foods included yesterday in a new SEC filing, his praise of Amazon sounds more like a man toasting his fiancée at their engagement party. He expects Amazon to put pressure on grocery stores to lower prices.
"There are no guarantees in life", Mackey said in response to a final question from an audience member to wrap the meeting. "It is really fascinating to think how the landscape could change if this deal goes through", Giammona says. Many said they had been told by managers not to speak to reporters.
"We're gonna evolve", Mackey said.
"Whole Foods customers who buy in large, are also Amazon users, Amazon Prime, and are very open to online way of buying", says retail expert with Magid Consultants, Matt Sargent. The investment bank led global M&A rankings last year and, based on year-to-date figures from FactSet, it's on pace to do so again this year-this time with a little help from Amazon and Whole Foods. For Amazon, Whole Foods is a "sustainably sourced guinea pig", as Manjoo calls it.
While many of Whole Foods stores are not now setup for drive-in and pickup, adding that capability would create big synergies with Amazon's e-commerce business by reducing last-mile delivery costs, says a Citigroup report published on Tuesday. Amazon has, however, rolled out a futuristic store concept with no cashiers or checkout lines.
According to Deutsche Bank analyst Paul Trussell, "The Whole Foods Market acquisition represents a game changer with Costco's competitive moat in grocery under greater threat while its digital platform lags peers, putting membership renewal at risk for decline".
Beyond the romantic metaphor, Mackey also said the companies discussed what they could do together, though he could not share those plans until the transaction closed.
"We could have talked for 10 hours", he said. He noted that Amazon was known for its innovation.
Such changes may be a long way off, and Amazon has plenty of time to change its strategy, with the $13.7 billion deal not expected to close until the second half of the year. At least one customer was concerned that an Amazon purchase would further distance Whole Foods from its roots as a purveyor of premium, organic and specialty foods.
When asked about how benefits and compensation would synch up for Amazon and Whole Foods employees, Mackey joked that everyone would get free Amazon Echos.
Whole Foods used to be one of the leaders in organic and natural foods, but other chains have increased the availability of those products.
