The announcement of Amazon's largest acquisition yet sent stock prices for major grocery chains tanking Friday morning. Interestingly, this news comes just a day after Digital Journal reported that Amazon was interested in another acquisition, corporate messaging startup Slack, worth an estimated $9 billion or more. It already operates AmazonFresh delivery service, and has indicated plans to launch in-store pick-up at Whole Foods. "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an incredible job and we want that to continue."E-commerce has led to massive declines in retail purchases throughout all product channels in the past decade".
Whole Foods' stock soared 27 percent. The deal, expected to close during the second half of 2017, signals times are changing for the grocery retail sector.
"Amazon has the technology and distribution centers to deliver things better than anyone else", Feinburg says of the deal.
That, in turn, could help Amazon do better with pricing and promotions, branding and the overall store experience, said Robert Hetu, a retail analyst at Gartner. Whole Foods over the past decade led the move into high-quality, organic food, but its growth in slowed as traditional grocers responded with similar offerings. The Seattle-based company was recently granted a patent for technology that would block shoppers from comparing prices from their mobile devices while they're in stores.
Small-company stocks fell more than the rest of the market.
Whole Foods, which broke onto the scene offering stores full or organic food options, has struggled and faced pressure from advisors to sell or merge with another company.
Elizabeth Lim, senior analyst, Mergermarket, said the transaction is the second-largest US grocery deal on record after Cerberus Capital Management, CVS Health Corp and SuperValue bought out Albertsons in 2006 for $17.4 billion. Both companies said there will be no layoffs, but did not respond to other questions about Amazon's plans for Whole Foods. Meanwhile, Whole Foods CEO John Mackey said Amazon's influence will likely increase quality and innovation, ultimately leading to an increase in customer satisfaction.