Announced this morning, Amazon will be purchasing Whole Foods for $13.7 billion; around $42 a share. This is considered to be a premium factoring in Whole Foods’ current stock price, closing last night at $33.
In Amazon’s recent press release, Amazon founder and CEO Jeff Bezos states:
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. Whole Foods Market has been satisfying, delighting and nourishing customer for nearly four decades – they’re doing an amazing job and we want that to continue.”
So what does this mean for grocery and retail?While Amazon is and always has been serious about shopping, its efforts in reaching out to brick-and-mortar stores have been pretty small-scale besides testing its own store. Purchasing Whole Foods completely turns this around. If this acquisition goes through, Amazon will have a serious presence in grocery with an already established reputation for mindfully shelving brands, with potential to expand in the future.
For Whole Foods, Amazon could be the answer to some of its issues. Struggling in sales, margins and profits Amazon can bring an efficiency and ability to reduce price that Whole Foods was unable to do on its own. Amazon has a reputation for fast and easy delivery, and a great overall experience for customers.
What does this acquisition mean for the future of grocery and retail? Grocery delivery has become increasingly popular with programs like Instacart and Amazon Fresh.With the incorporation of brick-and-mortar stores, perhaps we will see a much more seamless and widespread use of those delivery services. Whole Foods may also have an easier time with price reduction of organic products, an issue that was aided in the closing of over 120 store in the past year.
The future of grocery could be coming fast, and I personally look forward to receiving all of my fresh and organic produce by Amazon drone.
