The all-cash transaction is valued at $13.7 billion, with Amazon assuming Whole Foods' debt.
A crowded local grocery market became more interesting - and probably more competitive - as online retail powerhouse Amazon announced Friday that it will buy organic foods specialist Whole Foods, which now has stores in Washington Twp., Mason and Cincinnati. The Journal said the acquisition "could make Amazon an overnight heavyweight in the all-important grocery business..."
Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general".
The shift to younger shoppers over time is expected to play a part in the transformation of online grocery shopping, he said. Blue Apron and many of these other meal-kit providers are well-resourced for storing and selling fresh food, and they are already in good metropolitan areas to begin with.
Pachter said that even if Amazon gets 20 million members of its Prime loyalty program to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million not going to traditional supermarkets.
"This will definitely make the market more competitive", she added.
"The conventional grocery store should feel threatened and incapable of responding", Pachter said.
Whole Foods has posted seven straight quarterly sales declines at established stores and recently overhauled its board of directors in the face of pressure from activist hedge fund Jana Partners LLC. It also had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's. State Street and Fidelity both have a substantial amount of shares in Whole Foods, as BBJ reported. And the company has launched an offshoot chain named after its "365" private label brand, a nod to the popularity of no-frills chains that draw shoppers with low prices.
-Amazon. Investors like the deal and think it will be good for the online retail giant, which has been expanding its grocery offerings. Then it uses sensors, computer vision, and deep-learning technology to track shoppers and what items they pick up. He's got professional respect for Amazon for how efficiently and successfully it runs its business. "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.
JPMorgan analyst Doug Anmuth believes that the buyout would allow Amazon to be more innovative in delivering the customer buying experience in Whole Foods stores.