Amazon buying Whole Foods in bold move into brick and mortar

Amazon to buy Whole Foods for $13.7 billion

Amazon to purchase Whole Foods for US$13.7 billion, Inc., the world's largest Internet-based retailer, said Friday it will acquire Whole Foods Market Inc., a grocery store chain featuring foods without artificial preservatives, colors, flavors, sweeteners and hydrogenated fats, at a total cost estimated to be 13.7 billion USA dollars.

"Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively", said Mickey Chadha, vice president and senior credit officer at Moody's Investors Service.

Groceries have been something that Amazon has always had their eye on. One more reason it's a tough time to be in the food business - but a great time to eat.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. It also had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's. Shoppers simply pick the items they want off the shelves and leave the store. In order for Amazon to get the volume growth they are looking for, fresh foods has to be part of the equation.

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Whole Foods is very, very convenient to tens of thousands of Amazon employees working on the company's South Lake Union campus, and often living nearby as well. Stone sees the possibility that Whole Foods CEO John Mackey could do what he's wanted to do, expand the chain to about 1,000 stores from its current stable of more than 460.

The Whole Foods deal is expected to close in the second half of 2017, pending shareholder and regulatory approvals. However, it was rumored that Amazon plans to acquire Slack.

"This is an natural disaster rattling through the grocery sector as well as the retail world", said Mark Hamrick, senior economic analyst for For customers, this could mean better prices and delivery options. Whole Foods already has a lot of in-store dining and lots of prepared foods.

"Dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks", O'Shea said. In 2007, Amazon launched AmazonFresh, a grocery delivery service. There could be all kinds of initiatives to repurpose the brick-and-mortar store. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer". It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million in cash, following a string of online acquisitions including ModCloth and Moosejaw.

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