Amazon wrecked the mall. Now it's coming for the grocery store

Posted June 20, 2017

This is now the internet retailer's largest deal ever, as Amazon is preparing to make its biggest incursion into the brick-and-mortar retail sector of the economy. The deal is estimated to be worth almost $13.7 billion, at $42 per share.

In a news release, Amazon said it would acquire the upscale supermarket chain for $42 a share in an all-cash transaction that includes that company's net debt, Efe news reported.

Founded in 1978 in Austin, Texas, Whole Foods Market is the leading natural and organic foods supermarket, the first national "Certified Organic" grocer, and uniquely positioned as America's Healthiest Grocery Store™. It operates approximately 456 stores in the United States, Canada, and the United Kingdom.

On the flip side, Amazon could use Whole Foods stores as pickup locations for deliveries, an option Amazon already offers in many cities by installing lockers at 7-Eleven and other retailers.

"We want to assure you that Amazon shares Whole Foods Market's deep commitment to quality and customer service".

After the announcement, Amazon's shares went up more than two percent and Whole Foods Market shares went up by about 28%. Analysts say the Whole Foods footprint and distribution channel could theoretically make 5-minute deliveries a reality. (NASDAQ:AMZN) "a launching pad not just for food but possibly drugs as well where customers aren't willing to wait even a day".

Peggy Hall, a Unionville resident shopping Friday at a Whole Foods supermarket in West Hartford Center, said she would probably not buy food online.

"We believe AMZN can work to transform the physical retail experience".

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It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.

So what if you could get Whole Foods products or other groceries delivered to your door?

"This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail", said Mr Paul Cuatrecasas, chief executive of Aquaa Partners, a London-based investment banking firm, in an e-mail.

The grocery store business has been rapidly changing, but today that change just might have gone into overdrive.

He said he expects the marketing to begin shortly after the combined company closes the deal in the second half of the year.

West Hartford resident Nancy Kennedy, 88, who stopped by the Whole Foods store to shop, said she does not go online because she's not familiar with digital technology.

"Amazon is an innovative company and we are excited about our partnership". 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. Right now, Ahold's stock is down by almost 10%. Walmart and Target also took significant hits.

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".