Amazon Charts Future of Food Shopping with Whole Foods Deal

Amazon buys the Whole Food Market company. The location at 3751 E Foothill Blvd Pasadena Calif.

Amazon buys the Whole Food Market company. The location at 3751 E Foothill Blvd Pasadena Calif.

Friday's announcement that e-commerce giant would buy the Whole Foods grocery chain had major implications for grocery delivery startup Instacart, which has pitched itself for years as a way for brick-and-mortar retailers to resist competition from Amazon.

Amazon has agreed to buy the organic grocery chain for $13.7 billion, or $42 a share, in an all-cash transaction and assume the company's debt.

Shopper Earlene Garvey had a carload of groceries Friday from Whole Foods but said nothing is easier than having groceries delivered from Amazon's service AmazonFresh.

The deal could be "transformative", Moody's lead retail analyst Charlie O'Shea said, "not just for food retail, but for retail in general".

Amazon.com, Inc. (NASDAQ:AMZN) has struck a deal to acquire Whole Foods Market, Inc. 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 move comes after activist investor Jana Partners took an 8% stake in Whole Foods in April and pushed the company to look into strategic options including a sale.

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

When Amazon approached, Whole Foods turned again to Evercore.

The almost $14 billion deal is the largest purchase in Amazon's history.

Amazon could have built up its groceries business without acquisitions, but that would have been costly and time-consuming, said Neil Saunders, managing director of GlobalData Retail.

Meanwhile, Whole Foods stock soared on the news, jumping almost 30 percent by mid-morning.

Amazon could cut costs if the technology gets good enough to deploy at Whole Foods locations. Currently, WFM operates approximately 460 grocery stores among the U.S., Canada and the United Kingdom, giving Amazon more operational points in major cities and suburbs. Then it uses sensors, computer vision, and deep-learning technology to track shoppers and what items they pick up.

With this strategy, Amazon is planning to make the prices competitive and attract "more low- and middle-income shoppers" to its retail stores, which may still be located in posh localities.

Google Shopping: Google also have ties with Whole Foods, and one possibility with the recent Amazon acquisition is transferring deliveries to Amazon, and far away from Google.

As sales have slumped, Whole Foods executives have tried to highlight what distinguishes it from rivals.

Whole Foods Market is renowned for offering the best organic and natural foods in the world-and merging its business with another world-known ecommerce giant only means more good news for consumers.

But if Amazon can be the one-stop shop for everything - groceries had been one of the key missing elements - customers would have even less of a need to go to Walmart or elsewhere. It also charges customers delivery fees.

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