The merger signals Amazon's intention to expand its Amazon Fresh grocery operation from a mostly online business to something that could include in-store pick-up at Whole Foods' more than 460 locations in the U.S., Canada and the U.K. In Seattle, Amazon recently opened two of its own drive-through grocery pickup locations for Amazon Fresh customers.
In a move with far-reaching implications for the US grocery business, online retail pioneer Amazon and organic grocery chain Whole Foods Market announced Friday that they have entered into a definitive merger agreement under which Seattle-based Amazon will acquire Whole Foods for about $13.7 billion.
Whole Foods accounts for just 1.2 percent of the USA food and grocery market share, while Amazon has just 0.2 percent, according to research firm GlobalData Retail.
"Amazon is known to drive down prices and make the shopping experience more efficient", Wu said.
"I think this acquisition is a concern", he said.
Amazon did not elaborate on the strategic rationale for buying a grocery chain, but analysts said the acquisition has the potential to strengthen its ties to consumers through its Prime program.
Shares of Byron Center-based grocery retailer and distributor SpartanNash Co.
"Are cars off limits to Amazon?" said Levinsohn. As Amazon invests in new benefits and makes it easier for everyone to afford, there's a long runway for growth, especially internationally. "Either way, it's good for consumers like myself", said Di Wu, a NY resident in her early 30s who is a member of Amazon's Prime fast-shipping club and who shops at Whole Foods at least twice a week.
"There's no value in Amazon keeping the status quo at Whole Foods".
But it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978.
Figures from Capitol Hill are already calling for serious antitrust review of the Amazon-Whole Foods deal.
- Amazon has been pushing for drone delivery for several years, but finally launched its first project in Britain in 2016, saying regulatory obstacles were too great in the United States.
"Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively", said Mickey Chadha, vice president and senior credit officer at Moody's Investors Service.
"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA. "The Justice Department and Federal Trade Commission must undertake a review that considers not just the merger's impact on prices but also the impact on jobs and wages", said Rep. Ro Khanna, D-Calif., in a statement to Vice. Based on his forecasts, Amazon will likely rank as the ninth largest US grocery retailer this year - though he expects it to assume third place by 2021, behind only Walmart and Kroger.
However, local food marketing and retailing experts tell MiBiz that early stock market reactions are not necessarily the best indicators of long-term challenges.
"It's pharmacy. It's having the ability to put stores that are similar to Apple stores inside Whole Foods", he said. Amazon Web Services did it with the IT department.
"It would absolutely have to come down until it's included in a Prime membership", Anderson said. COST, -7.19%, catch up in these categories, Whole Foods finds itself feeling pressure from investors.
"I would have thought it'd be somewhere down the line but who knows".