Inc said on Friday it would buy Whole Foods Market Inc for $13.7 billion, in an embrace of brick-and-mortar stores that could turn the high-end grocer into a mass-market merchant and upend the already struggling US retail industry.
Amazon's move is a threat to supermarket chains like Kroger, fresh produce retailers like Sprouts Farmers Market, big-box retailers like Walmart and Target that have moved aggressively into groceries, and companies like Costco that sell bulk products, including food, at discounted prices.
Some major retail chains' shares dropped Friday as investors wondered whether Amazon will hurt retailers selling groceries the way Amazon's online business has wounded other types of physical stores, including booksellers.
That said, there is some speculation that Amazon could end up changing its plans and ultimately use advanced technology inside Whole Foods stores.
The definitive merger agreement means Amazon will pay $42 per share in an all-cash transaction, and take on Whole Foods Market's net debt.
The acquisition also represents the single largest deal Amazon has made to date. Amazon is also experimenting with a "click and collect" model that lets customers buy groceries online and pick them up at new AmazonFresh locations. Whole Foods whose fleet of stores now numbers 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. 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.
When it raised $400 million in March, Instacart said it operated in 35 markets and had 135 partnerships with grocery retailers around the country. Firstly, don't forget that Whole Foods is a pretty trendy and high-end outlet with an organic focus.
Whole Foods customer Bethany Capels, 34, of Mendenhall, Miss., loads her Whole Foods Market purchases in her auto in Jackson, Miss., Friday, June 16, 2017. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too. Amazon's stock, which recently traded over $1,000 for the first time, rose $23.54, or 2.4 percent, to close at $987.71.
That was feeling of Taylor Malooly, 19, a University of Texas student at Whole Foods in Austin, who said a Whole Foods delivery service would have to be fast if he were to try it.
Hetu said Amazon isn't likely to bring that to Whole Foods right away but could deploy pieces of it to further cut costs. Perhaps one day Whole Foods will even shed its derisive nickname: Whole Paycheck.style="text-align: center;"