Amazon To Acquire Whole Foods Market For $13.7 Billion

Amazon To Acquire Whole Foods Market For $13.7 Billion

Amazon announced Friday they would buy Whole Foods Markets; a move that sent Kroger shares tumbling.

Amazon's deal to buy a USA grocery chain signals a significant threat to food retailers.

Some also speculated that a European grocery conglomerate could come knocking on Whole Foods' door, though Amazon's growing power would make it a formidable competitor to take on. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains. Shares of other grocery-selling chains like Kroger, Target, Sprouts Farmers and Costco experienced a dip after the announcement.

Stock rates of supermarkets, food producers, processing companies, retailers, and shopping malls lost over U.S.$35 billion nearly immediately after the news was released, indicating the potential effect this could have on the various industries. Target tumbled by 10 percent and Walmart was down by 6 percent.

The shift to younger shoppers over time is expected to play a part in the transformation of online grocery shopping, he said. Many of them, including local Walmart locations in Springfield, offer curbside pickup, and other stores offer delivery services.

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"This will definitely make the market more competitive", she added.

"The conventional grocery store should feel threatened and incapable of responding", Pachter said. "A lot of people will love that", said Whole Foods customer Brad Anderson.

The acquisition stands as a huge boost for Amazon's strategy to integrate the brick-and-mortar model into its business. Shares of Whole Foods shot up 29 percent and closed at $42.68 amid the news.

While Whole Foods has struggled to expand, Amazon has been expanding its reach in goods, services, and entertainment. It could have built up its groceries business without acquisitions, said Neil Saunders, managing director of GlobalData Retail, but that would have been costly and time-consuming. She shops at Whole Foods for organic food and nitrate-free deli counter products and also visits farmers markets to buy fruits and vegetables.

Whole Foods, often derided as "Whole Paycheck" for its high prices, could see its reputation change if Amazon, a master at undercutting its brick-and-mortar rivals, passes any savings from automation to customers.

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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".

About 450: Number of Whole Foods stores across the country. And the key measure that retailers look at to gauge their health, revenue at stores open more than a year, has fallen for seven quarters in a row.

As for its stock price, the grocer skyrocketed up almost 30 percent in just one day. Whole Foods will keep operating stores under its name. One day, these stores might even serve as launch centers for Amazon's delivery drones.

Whole Foods has already been reducing prices to try to turn around its worst sales slump since going public in 1992.

Mackey will stay as CEO, and the headquarters will stay in Austin, Texas. Just two years ago, Whole Foods CEO John Mackey told Bloomberg BusinessWeek that Amazon's foray into grocery delivery would be "Amazon's Waterloo".

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