Amazon buys Whole Foods for $14 million

A Wall Street sign near the New York

A Wall Street sign near the New York Stock Exchange on Sept. 30 2008

"Sadly, the hard-working men and women who work at Whole Foods now face an uncertain future because the Amazon model for grocery stores ultimately leads to fewer jobs, worse benefits, and more automation", Perrone said.

Whole Foods, which had sales of $15.7 billion previous year, owns 431 stores across the USA, and Amazon will use that infrastructure of locations, the grocer's knowledge and data, along with its elevated brand status, as a foundation for expanding its fresh-food delivery business.

But Instacart is also a competitor to Amazon's growing grocery delivery service, AmazonFresh.

Just two years ago, Whole Foods CEO John Mackey predicted disaster for Amazon's foray into grocery delivery, telling Bloomberg BusinessWeek it would be "Amazon's Waterloo".

Costco: While it's not particularly known to be techie, the company remains the third biggest supermarket chain worldwide, trailing Walmart and Carrefour in France.

In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance.

"I think that this takes all of the pressure off Whole Foods and gives Whole Foods the opportunity to revitalise that business and, of course, it stems the criticism from all of these activist investors", said Neil Saunders, managing director of GlobalData Retail in NY. That fits with Whole Foods private-label push to compete on price, and gives Amazon a bigger foundation on which to develop its own food brands.

Walmart, which has the largest share of the US food market, has already been pushing harder into e-commerce to build on strength in its stores and groceries. It was widely reported that Jana was pressing Whole Foods to consider a sale. Amazon could integrate it with technological advancements to improve the shopping experience, and, in turn, help Whole Foods rein in revenue. 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.

Amazon got through the upscale grocer's checkout line first.

Hetu said Amazon isn't likely to bring that to Whole Foods right away but could deploy pieces of it to further cut costs. State Street and Fidelity both have a substantial amount of shares in Whole Foods, as BBJ reported.

When Amazon.com Inc. completes its acquisition of Whole Foods Market Inc., Chief Executive Officer Jeff Bezos will try to keep the grocer's reputation for premium fresh foods while cutting prices to shed its "Whole Paycheck" image. It wasn't until 2015 that the number of pure grocery stores actually started to decline, according to government numbers, and then only slightly. "More customers are concerned about price and value, and that has a material impact on profitability". "It'll be interesting to see what [technological innovations] they choose to pull forward into a larger-scale brick-and-mortar environment - which pieces are most resonant for shoppers and consumers". With a $13.4 billion purchase, Amazon is stepping up its game and hoping to get an even stronger foothold in the retail market.

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