Amazon makes a major move in the grocery space with Whole Foods takeover.
We knew Amazon was serious about getting into the grocery business, but we didn’t know they were billion-dollar-acquisition serious. And yet, Friday the online retail giant announced they would acquire Whole Foods Market in a deal valued at $13.7 billion, according to CNBC.
Whole Foods, after a period of poor performance, was looking for a sale, but all accounts expected the grocery store chain to merge with another grocer — not the big bad digital kid in town. As a result of the deal, Amazon stock rose 3 percent, while other grocers like Kroger, Supervalu and Costco dropped 16, 11.5 and 9.2 percents respectively.
Online retail is seen as the future of grocery shopping, but consumers have been more resistant to the change than they were or are with nearly any of other product. Peapod has been around for what feels like ever now, and even Amazon’s existing grocery offerings — Amazon Fresh and Prime Now — never really took off the way its other services did.
Still, the acquisition of an established and reputable grocery chain that connotes a certain quality of food and lifestyle says a lot about Amazon’s expectations for the space. Whole Foods’ CEO, John Mackey will stay on and continue to run the chain as under the Whole Foods brand, saying:
This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.
According to CNBC, Walmart represents the best potential challenger to whatever it is that Amazon is building. With an obvious and well established physical presence, Walmart has been moving successfully into more online-friendly territory, namely in the form of the ‘click-and-collect’ model which allows customers to order online and pick up at the store.