Amazon's purchase of Whole Foods already impacting grocery industry

Amazon's purchase of Whole Foods already impacting grocery industry

Inc just announced a deal to purchase Whole Foods Market Inc for US$13.7 billion, marking a move into the realm of brick-and-mortar stores that is already sending shockwaves through the economy.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand. "Grocery chains like Kroger, Target and Wal-Mart are not ready for what Amazon brings to the table with the new and improved Whole Foods".

Well, not anymore. In one fell swoop, Amazon founder Jeff Bezos has charged into the supermarket business with the US$13.7 billion (S$19 billion) acquisition of Whole Foods last Friday. Whole Foods Market, which has more than 420 stores in more than 40 states in the US, soared more than 29.1 percent to $42.68.

The merger of Whole Foods and Amazon is expected to close later in 2017 after gaining approval from USA regulators and Whole Foods' stockholders.

Whole Foods accounts for just 1.2 percent of the United States food and grocery market share, while Amazon has just 0.2 percent, according to research firm GlobalData Retail.

Set up in 1978, Whole Foods, whose stores now span 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.

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He said the deal allows Amazon to quickly build up its business in groceries through buying a well-regarded brand.

Drew Herdener, an Amazon spokesman, said in a statement the company has "no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned". Shares of Whole Foods shot up 29 percent and closed at $42.68 amid the news. In the first quarter this year, food-and-drink sales at American brick-and-mortar stores were down by nearly $3 billion even as grocery trips rose, according to market research firm Nielsen. This will help Whole Foods have an online delivery presence.

Amazon is the world's largest online retailer by sales.

In May, under pressure from Jana Partners, Whole Foods replaced five board members and its chief financial officer. Prime membership for groceries cements a relationship with a grocery store, and it encourages members who have not shopped there to shop in Whole Foods.

Whole Foods now has 430 stories, but after the acquisition, they will have 350 million stores because they will be on every desktop, Feinberg says. Then it uses sensors, computer vision, and deep-learning technology to track shoppers and what items they pick up.

Following a decline in sales, Mackey has been under pressure from activist investors lately to either restructure or sell itself after his longstanding co-CEO who was more involved with daily operations stepped down. "Amazon's acquisition of Whole Foods is one of those". He's gonna stay put as head honcho and the firm will remain based in Austin, Texas.

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