28 June, 2017
"Amazon's brutal vision for retail is one where automation replaces good jobs". While Amazon has been building more and more delivery hubs, the Whole Foods deal gives it 456 stores that it can instantly fit into that network, said Josh Olson, analyst with Edward Jones.
"The ramifications for all of retail are seismic - not just retailers that sell grocery, but for everyone", Gordon Haskett analyst Chuck Grom said. Amazon's stock, which recently traded over $1,000 for the first time, was up $34.15, or 3.5 percent, at $998.56.
The $42 a share offer from Amazon is a 27 percent premium over Whole Foods closing stock price on Thursday. Kroger, which had been rumored late a year ago to be considering a takeover of Whole Foods, fell by 9 percent 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.
What do you think it will be like to walk into a Whole Foods 10 years from now?
Light added, "Even customers who love Whole Foods have given it the nickname 'Whole Paycheck.' And Amazon will help that go away". Amazon is also experimenting with a "click and collect" model that lets customers buy groceries online and pick them up at new AmazonFresh locations.
Whole Foods Market is a leading natural and organic foods grocer, but has been widely known for high prices and under pressure from fierce competitions.
Just two years ago, Whole Foods CEO John Mackey predicted disaster for Amazon's foray into grocery delivery, telling Bloomberg BusinessWeek it would be "Amazon's Waterloo".
The deal is for $13.4 billion in cash and the remainder in debt.
Whole Foods, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods. Amazon and Whole Foods expect to close the deal during the second half of 2017.
"It is hard to say what Amazon's online strategy will be for Whole Foods", she said. It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos.
The acquisition of Whole Foods would be by far Amazon's biggest purchase.
Amazon would also look to change Whole Foods' inventory, introducing its own private-label products to replace items deemed too expensive to have mass appeal, the person with knowledge of the matter said.
On the other hand, as she reflected on her experience shopping at Whole Foods Friday, McCarthy admitted there may be some benefit to Amazon's takeover, particularly for elderly people who may not be able to get out to the grocery store on a regular basis. This deal gives Amazon a major foothold in that space.
Meanwhile, in a letter to its customers, Whole Foods Market, Inc.
