The world woke up to this astounding business news this morning: online retailer Amazon is buying natural food wholesaler Whole Foods in a deal reported to be north of $13 billion.
It seems that Amazon has abandoned their effort to create their own Amazon grocery stores, which we told you about last year, and instead are just buying a turnkey operation. And what a turnkey operation it is!
In a note to ABC news, a Moody’s retail analyst opined that the deal maybe “transformative”, and “not just for food retail, but for retail in general.”[The] “implications ripple far beyond the food segment, where dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks,” explained the Moody’s analyst, Charlie O’Shea.
This is particularly timely because, as Amazon’s hometown newspaper, the Seattle Times, notes, this comes at a time when Whole Foods has been facing “stepped-up competition from Costco Wholesale, Trader Joe’s and other grocers.”
As an aside, this author opined earlier today on her Facebook page that “This makes something make a whole lot more sense now: Whole Foods have been reorganizing all the shelves and getting rid of a whole lot of my favourites at my local Whole Foods, and my source there has been complaining for a few months about how Whole Foods has been both screwing the pooch and jumping the shark.”
In light of today’s announcement, it seems likely that Whole Foods has been reorganizing their inventory to either be more appealing to Amazon, or to come into line with requirements by Amazon before they would move forward with the purchase.
In a joint statement by Amazon and Whole Foods, Amazon CEO Jeff Bezos said that “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”
Added Whole Foods CEO John Mackey, “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.”
According to the joint press release, Mackey will remain CEO of Whole Foods, and they expect to close the deal in the second half of 2017. You can read that statement by Amazon and Whole Foods here.
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