Amazon to buy upmarket grocer Whole Foods for $13.7 bln

Ivan Schwartz
June 17, 2017

Amazon.com sent a shock wave through the grocery industry Friday when it announced plans to buy Whole Foods Markets and formally enter the world of bricks-and-mortar retail. The grocery store operator was also under pressure from activist investor Jana Partners. Meanwhile, the more than 460 Whole Foods stores in the U.S., Canada and the United Kingdom could be turned into distribution hubs - not just for delivering groceries but as pickup centers for online orders.

"The conventional grocery store should feel threatened and incapable of responding", Pachter said. On Friday, WalMart announced it is buying men's online clothing retailer Bonobos for $310 million.

The deal reinforces the need for Canadian grocery chains to develop their e-commerce and home delivery solutions, wrote Irene Nattel, an RBC Dominion Securities Inc. analyst, in a note.

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Amazon also last month launched its Fresh pickup service, which is aimed at Prime members who would prefer to skip the hassle of roaming the grocery store aisles altogether. It will continue under co-founder and CEO John Mackey with its headquarters in Austin, Texas. Whole Foods Market, Inc. specializes in natural and organic foods.

Amazon's move is a threat to supermarket chains like Kroger, fresh produce retailers like Sprouts Farmers Market, big-box retailers like Walmart and Target that have moved aggressively into groceries, and companies like Costco that sell bulk products, including food, at discounted prices. Amazon has already opened a chain of bookstores with locations in Seattle, San Diego, Portland, Dedham, Chicago, Lynnfield, New York City, and Paramus with more locations to follow. Amazon, which for years has been testing new technology and innovations in quiet corners, would now have a network of physical locations to test and implement those ideas. Amazon and Whole Foods both have a presence in the Lehigh Valley. "They're greedy bastards, and they're putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods because it's in their self-interest to do so". However, Whole Foods does not have access to Instacart's financial numbers and analytics. "Amazon is the master at keeping as much margin as possible".

According to reports on Friday, Amazon is set to buy Whole Foods for the staggering price tag of $13.4 billion.

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