Amazon buying Whole Foods in bold move into brick and mortar

Whole Foods Market will still run physical stores under its own brand so the deal seems more about bringing Amazon's scale and expertise - especially in analytics - to bare.

"The conventional grocery store should feel threatened and incapable of responding", Wedbush Securities analyst Michael Pachter said.

The deal has the possibility to be "transformative", Moody's lead retail analyst Charlie O'Shea said in a note, "not just for food retail, but for retail in general".

While Whole Foods has struggled to expand, Amazon has been expanding its reach in goods, services, and entertainment.

The deal is expected to close in the second half of 2017.

Whole Foods has more than 460 stores in the United States, Canada, and the United Kingdom.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales and pressure from activist investor Jana Partners.

June 16 A decision by Goldman Sachs Group Inc previous year to move an investment banking veteran to Seattle, as well as Evercore Partners Inc's hiring of a top banker defending companies against activist investors, has paid off handsomely.

Similarly, Instacart was not privy to the news that Amazon was acquiring Whole Foods until the deal became public on Friday.

Last Friday, when Amazon announced the acquisition, shares of Walmart as well as Target, Kroger, and Costco all tumbled.

Shares of dozens of supermarkets, food producers, payment processors and shopping malls collectively lost at least $35 billion in USA market value on Friday as the news reverberated across financial markets.

Amazon is buying Whole Foods.

"This shows that online is going to be very dominant in the grocery business - and very quickly", said Errol Schweizer, a former Whole Foods executive.

Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs. The online retail giant recently launched a new store called 'Amazon Go.' Located in Seattle, the store replaces cashiers with technology you would normally find in self-driving cars. The shopper's Amazon account gets automatically charged. "It's probably like the ideal match right", Whitney Winchester said.

"I'm excited to see maybe if they do some kind of thing with Prime now and Whole Foods, that would be interesting to me", Hiddeman said.

Hauptman said millenials will likely change how food stores market and sell their products. That could change if Amazon not only cuts operational costs but passes those savings onto customers.

Courtney Hiddeman and her family live right down the street from the Whole Foods "world headquarters" on Bowie Street in Austin. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods. "More customers are concerned about price and value, and that has a material impact on profitability".

  • Anthony Vega