Amazon set to acquire Whole Foods in $13.7bn deal

Angie Massey
June 20, 2017

Notably, shares of dozens of supermarkets, food producers, shopping malls and payment processors collectively lost about $35 billion in the USA market on Friday in response to the news.

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.

Ocado shares rocketed by nearly 7% on Monday as Amazon's swoop on United States grocer Whole Foods raised the prospect of a supply deal between the two online retailers. Investors looking into the crystal ball now see more and more of the home delivery or the pickup version of food swinging to Amazon more quickly than anyone thought it would before this deal. Hetu said Amazon could make pertinent offers to attract shoppers of one but not the other, or get shoppers of both to buy more.

What do you think it will be like to walk into a Whole Foods 10 years from now?

Meanwhile, Amazon's proposed takeover of Whole Foods has spurred talk of other mergers and acquisition in the grocery sector. Whole Foods has also been pushing private labels in order to compete on price, so this would give Amazon a solid base to work from in creating its own in-house food brands.

Grocery shopping is likely to get more sensory, as retailers try to make stores a draw beyond just picking up staples. He raised his price target on Whole Foods to $45 after the Amazon deal was announced.

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As his company Amazon has been expanding its reach in goods, services, entertainment and groceries - Bezos might take over as the richest person in near future.

"I think retailers are going to have to bring a lot of excitement to the store", said Stew Leonard Jr., CEO of Stew Leonard's, a grocery chain with five locations in CT and NY. The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk, which would help Amazon differentiate itself in the brick-and-mortar setting and reduce labor costs at Whole Foods stores.

But if Amazon can be the one-stop shop for everything - groceries had been one of the key missing elements - customers would have even less of a need to go to Walmart or elsewhere.

It is doubtful that beer distribution was the driving force behind the acquisition of Whole Foods, but it will have a material impact on the industry and the relationship between the three tiers.

Vanguard became the biggest holder of Whole Foods Market in February, owning $939.86 million in Whole Foods, which is about 9.5 percent of the company's market cap. Amazon founder Jeff Bezos points out that Whole Foods is "loved" by its customers for the quality of its products, and will maintain its corporate offices in Austin, Texas, for now.

Amazon understands same-day - in major cities - and two-day delivery. Rumors already have Amazon making drastic changes to the store's format, now focused on organic groceries and prepared goods.

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