Amazon said on Friday that it would buy Whole Foods for $13.7 billion.Jana, Whole Foods' second largest investor, had been pushing the company to perform better and add directors with experience in retail, technology, finance and real estate.
The acquisition could pose a bigger threat to Target, which has been building smaller stores in cities like NY to attract the affluent urban shoppers coveted by Whole Foods and Amazon, said Kurt Jetta, chief executive officer of TABS Analytics, a consumer products research firm.
The transaction will need to get the seal of approval from Whole Foods Market's shareholders.
"Amazon didn't just buy a grocery retailer". Both Walmart and Costco directly compete with Whole Foods' grocery business and Amazon's e-commerce product segment. This will likely enhance Amazon's ability to speed home deliveries to consumers by leveraging Whole Foods' physical store base. But if customers know that what they are getting is the same as what they'd get at the local store, they are more likely to try it out. It already operates AmazonFresh delivery service, and has indicated plans to launch in-store pick-up at Whole Foods.
The relationship between Instacart and Whole Foods dates back to 2014 but deepened in 2016, when they announced a new five year deal. It also had been facing increased pressure from rivals offering more organic options. Whole Foods' headquarters will still be in Austin.
Whole Foods, which has more than 460 stores in the United States, Britain and Canada, has a lot of brand power.
While Whole Foods has struggled to expand, Amazon has been expanding its reach in goods, services, and entertainment. Amazon has been gradually backtracking into the physical stores business, including strategies to open grocery and convenience stores. However, if they access the internet using their own data plan and not a store's Wi-Fi network, they could probably work around the blocking technology.
"Amazon's got its tentacles everywhere and that's another place to go", said Bruce Bittles, chief investment strategist at R.W. Baird & Co in Sarasota, Florida. He spoke with As It Happens host Carol Off about what the Whole Foods purchase means for Amazon, consumers and the economy as a whole. John Mackey, the founder of Whole Foods, is staying on as the head of that division.
No. Amazon says Whole Foods stores will keep their name and be run as a separate unit of the company. Its stock peaked in 2013 at $65.24. For example in 2016 it opened a bookstore in Washington Square Mall selling a limited number of best selling hard copy books, complete with printed out review cards for store clerks and online readers.
Other grocery stocks plummeted as investors contemplate an imminent industry shakeup and looming competition from Amazon.
Whole Foods sent a letter to customers after the merger announcement, calling the agreement a new chapter in Whole Foods' history and an incredible opportunity.