What happens now that Amazon is acquiring Whole Foods?

Discussion
Photo: Whole Foods
Jun 16, 2017
George Anderson

It seems like just yesterday — actually, it was just yesterday — that reports were published saying John Mackey had called the people behind Jana Partners, a hedge fund with a nine percent stake in Whole Foods, “greedy bastards” intent on ruining his reputation and forcing a sale of the company he co-founded to make a quick profit. As it turns out, it appears Mr. Mackey and the “bastards” have both won after it was announced this morning that Amazon.com was acquiring Whole Foods in a deal valued at $13.7 billion.

Whole Foods will continue to operate its business under its own banner and Mr. Mackey will remain as CEO of the company. Whole Foods’ headquarters will remain in Austin, TX.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO, in a statement announcing the deal. “Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades — they’re doing an amazing job and we want that to continue.”

“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,” said Mr. Mackey

While details of how the deal developed are not yet public, it has previously been reported that Amazon had internal discussions last year about a possible bid for Whole Foods. While reports indicated Amazon decided to pass, ultimately it came back to the idea as evidenced by today’s announcement.

DISCUSSION QUESTIONS: What do you think is likely to happen to Whole Foods once Amazon’s acquisition is approved? What will ownership of a major retail chain mean for Amazon’s future plans to move into physical retail?

Braintrust
"I think Whole Foods will eventually turn into an Amazon Fresh/Amazon Go hybrid."

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56 Comments on "What happens now that Amazon is acquiring Whole Foods?"

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Mark Ryski
BrainTrust

Once again Bezos demonstrates his penchant for big, bold moves and acquiring Whole Foods is certainly that. I think this is an excellent strategic move for Amazon. Clearly Amazon has been making moves in grocery with the launch of Amazon Go and Fresh, but these are mere dabbles compared to the acquisition of Whole Foods — this is a whole new ballgame. With 430+ Whole Foods stores, Amazon is now firmly in the brick-and-mortar retail business. Welcome to the party Mr. Bezos.

Celeste C. Giampetro
BrainTrust

You nailed it, Mark. In light of Walmart’s recent shareholder meeting and its clear intention to aggressively pursue ecommerce, this is no surprise. These two are going head to head after each other. It’s going to be an interesting few years as we see who wins the battle: the legacy physical retail or the ecommerce giant.

Charles Dimov
BrainTrust

Agree with you on this Mark. A few weeks ago we commented on “what if” Amazon were to acquire Macy’s. Well now we have a real-world situation. Amazon is not the “everything store” that has come out of the clouds, and touched down with a major retail chain presence. Big message to all retailers now is, “get your omni-channel strategy in gear.” Fail at this one and it could be “game over” for many more retailers.

Sterling Hawkins
BrainTrust

So exciting! Amazon acquiring Whole Foods represents the first true melding of the online and brick & mortar shopping experience at scale. We’ll be seeing Amazon leveraging Alexa’s shop-by-voice platform, its rapidly growing delivery capabilities, hyper-personalization, payment accounts and Prime membership into fuzing together the online and physical store experiences at Whole Foods in a way never before seen.

Vahe Katros
BrainTrust

Omnichannel is going to get better. Healthy eating lifestyle changes will be easier for that segment. What’s next? Pharmacy (Walgreens/CVS down as well). Last-mile options and a presence in demographics that resonate. Wow. Quick thoughts.

James Tenser
BrainTrust

Mind. Reeling. Investors. Salivating. Media. Exploding.

I didn’t need any coffee this morning to wake up once I saw the AMZN-WFM headline.

My first thoughts were for Jeff Bezos:

  • Careful what you wish for, my friend. Owning stores means operating them hour-to-hour and integrating online sales means working out how to fulfill orders in the stores for delivery or collection.
    That’s a massive challenge and I’m not so sure your early experiments with AmazonFresh and AmazonGo have revealed the answers yet.
  • Does Whole Foods have a reliable grasp on its store level inventories? Your online ordering engine will depend upon it. Adding pickers to the stores has potential to create some chaos.
  • On the plus side, you are acquiring a very valuable brand and real estate portfolio. Hope it doesn’t make you feel too tied down.
  • Maybe today’s $2B stock market gain is some consolation.
Vahe Katros
BrainTrust

Nice Jamie, oh and could you consider the following:

Alexa: “It’s time to take your medication Jane!

Jane: “I can’t find it!”

Alexa: “A drone will be delivering a replacement in 5 minutes, United Health has been notified. Would you like to speak to your primary care doctor?”

Jane: “No, but can you make sure my lunch is delivered with hot sauce?!”

It’s an exciting time to imagine. My other question is: I wonder what the folks in the center aisle think about this?

I have to pass along a tweet I just saw:

@JesalTV: Jeff Bezos: “Alexa, buy me something from Whole Foods.” Alexa: “Sure, Jeff. Buying Whole Foods now.” Jeff Bezos: “WHA- ahh go ahead.”

David Dorf
BrainTrust
Amazon’s acquisition of Whole Foods marks the beginning of yet another retail category under siege, similar to books, music, electronics, and toys that went before. I can only imagine Amazon plans to leverage the 400+ stores as mini-distribution centers from which customers gain access to fresh items via delivery, something that has been difficult to fit into the Amazon shipping model. This is a logical expansion of AmazonFresh, which charges customers an additional membership fee above Prime. I expect other grocery chains will need to step up their e-commerce plans, implementing drive-thrus and home delivery programs in order to compete. Whole Foods was the right target for several reasons. They have a reputation of being non-traditional and cutting their own path. Amazon’s plans to upend this industry will be well served by a culture that zigs when others zag, not unlike Zappos, another Amazon acquisition that appears to have gone well. Whole Foods’ size and market presence is large but not too large. That’s the right level of saturation if the stores are also to be used as distribution centers. And lastly, Whole Foods has a great reputation for quality and customer service, two things that Jeff Bezos highly values.… Read more »
Mohamed Amer
BrainTrust
Irrespective of any superlatives we may use today about the Amazon-Whole Foods deal, it is difficult to overstate the deal’s long-term impact on the retail and consumer goods industries and their supply chains. It’s always darkest before a new dawn. The turmoil in retail today is a precursor to a brilliant renaissance where the leaders will meld new DNA, agile learning organization and robust technology all wrapped around a customer-centric strategic model that moves retailing from moving and selling widgets to giving consumers exactly what they need, when they need it so they consume it the way they wish and do it with ease and convenience — turning purchases into automated impulse buys triggered by subconscious needs. At the risk of understating the impact, here are several points to consider: Customer experience gets a major boost. This acquisition shatters the artificial division between physical and digital. Consumers weave in and out of these realms without giving them any thought – it’s a singular customer experience, end-to-end. Competition over customer experience will happen at that level. Customer data is turning into gold. When you are able to combine entire lifestyle and purchase habits through store visits, purchases and online activities you… Read more »
Dave Nixon
BrainTrust

Yes. This.

“The turmoil in retail today is a precursor to a brilliant renaissance where the leaders will meld new DNA, agile learning organization and robust technology all wrapped around a customer-centric strategic model that moves retailing from moving and selling widgets to giving consumers exactly what they need”

Well said, Mohamed.

Tom Dougherty
BrainTrust

Their market share will GROW. This should never have been seen as a battle between online and traditional retail. It is JUST retail.

Suddenly Whole Foods has opened its doors to greater convenience and broader appeal. Whole Foods now has a location on every desktop and tablet.

Max Goldberg
BrainTrust

Why would Amazon want to acquire a chain that is underperforming and facing ever greater competition in a business segment with razor-thin margins and a management team that is under fire for being unable to generate greater profits? I know Bezos and company want to move into brick-and-mortar but I wonder if this acquisition is the best way to do that.

Stefan Weitz
BrainTrust

Two things: Instacart is hosed — so that $2 billion company is having a bad Friday. Second, I can’t imagine this makes financial sense on a unit economics basis but as far as making Amazon a daily habit, it is an excellent move.

Tom Erskine
BrainTrust
8 days 1 hour ago

Can we stop talking about e-commerce eating the world now? If anything, this move validates that for many categories of retail, the in-store experience still matters. This move gives Amazon an incredible set of assets on top of which they can build true omnichannel experiences, and I look forward to seeing the innovation.

Phil Masiello
BrainTrust

Amazon wants to be a significant player in the grocery space. They also want to dominate rapid delivery of e-commerce orders for food and other products. They want to apply their technology and customer knowledge to physical store supply chains and streamline the process.

In my opinion this is brilliant. Whole Foods will become a better operator with Amazon’s technology backbone. Amazon will get a stronghold in physical stores to build their mini-fulfillment center plan and deliver to the consumer faster. And this will further set Amazon apart from Walmart and other competitors because they can move faster.

Ken Lonyai
BrainTrust
This is clearly a shakeup, but with so many unknowns around strategy I don’t expect consumers to experience much change overnight. Amazon gets an instant footprint in grocery but will have to build many stores to reach a broad market. While there won’t be an immediate name change, my guess is that eventually the Whole Foods name will fade or be amended to “by Amazon.” As a person that gets a big portion of his diet from Whole Foods, I know firsthand that the grocer has had many shortcomings and that those dedicated to eating organic foods have had a lot of issues with them, especially over their support to kill GMO labeling. Depending upon what Amazon chooses to do, they may embrace those customers whom Mackey has disillusioned or may revamp the chain to be more mainstream. I think in time, they will go more mainstream. The real impact will be felt from competitors like Target and Kroger. I don’t believe they are positioned well enough to fight an onslaught in the category. Walmart will clearly dig in and at least for the next few years, there will be a food price war that will benefit consumers, hurt farmers,… Read more »
Meaghan Brophy
BrainTrust

I think Whole Foods will eventually turn into an Amazon Fresh/Amazon Go hybrid. The brick-and-mortar stores will continue to operate as regular grocery stores. But Amazon will also be able to offer faster grocery delivery, BOPIS and eventually implement nationwide “just walk out” technology. Whole Foods is also widely popular for their prepared hot foods and café, which plays into the Amazon Go concept of stopping in for a quick breakfast or lunch on the go. Amazon recently advertised Amazon Go job postings, hinting that they are already planning to expand the concept out of the flagship Seattle store.

Brandon Rael
BrainTrust

Very bold and exciting move. In a few simple words, Amazon and Jeff Bezos have made a significant and very strategic move to both grocery and brick-and-mortar domination. While we were all under the assumption that Amazon was taking a crawl, walk, run approach into the brick-and-mortar commerce model with Amazon Books and Amazon Go, this monumental acquisition is a game-changer and demonstrates the power of Amazon’s capabilities.

The whole grocery industry should be on notice as Amazon has expressed that they are firmly in the brick-and-mortar business. Brick-and-mortar remains very relevant and is undergoing a transformation to be a customer-obsessed model.

Dan Frechtling
BrainTrust

This could go in many different directions over time. At first Whole Foods will remain standalone. But Amazon is certainly able to bring a technology, data and Prime focus.

On the technology front, that means more e-commerce and omnichannel to help Whole Foods expand its geographic reach without physical capital investment. Expect more Whole Foods orders online. Some day drones from roofs? Maybe, when now you have 450 rooftops.

With data, a blending of customer insight, especially around the upscale buyer, will help Whole Foods understand more habits in more categories about its own customers. This can promote both SKU expansion and rationalization.

With Prime, the model is not just about delivery but the pricing package itself. “Subscribing to your grocer” will become a new option to augment other Prime benefits.

Charles Dimov
BrainTrust

This is a MAJOR wake up call for all retailers. Amazon’s acquisition shakes up grocery and has implications far beyond it for the rest of retail, too. This now means that Amazon has the last mile licked. Expect to start seeing a pick up in-store option when you buy anything from the website.

Implication for retailers: If you don’t already have an omnichannel strategy in action … then you better move FAST! You can’t go up against Amazon online (you’re just NOT going to win). The best option for retailers everywhere is to get your omnichannel house in order and give your customers the best experience possible. Fail at that and you might as well pack it in.

Doug Garnett
BrainTrust

I’m not surprised that Amazon has bought a brick-and-mortar chain, I have been predicting it for months because it’s the only way for Amazon to find profit on the retail side of their business.

I am surprised it’s Whole Foods. Amazon buys into a fundamentally troubled business model here and a company having to learn how to step back from unsustainable premium pricing.

This does fit with the Bezos purchase of the Washington Post — respected brand but with difficulties. And let’s hope that Amazon is wiser than some commenters I saw on Twitter this morning who were reinventing Whole Foods as merely a DC.

I expect Amazon will treat Whole Foods as true retail — the Amazon bookstores are not overloaded with online wizardry but are fundamentally just good stores.

The key to watch for: where next in Amazon’s search for retail profitability? Department stores? Home improvement? Mass market?

Art Suriano
BrainTrust

At first, not much. Whole Foods has had several consecutive quarters of negative comp store sales. This year’s first quarter showed a negative 2.4 comp store decrease followed by their last full year of negative 2.5 percent comp store sales. So that is a concern. Soon, as always, John Mackey will be challenged to improve the business or be forced out. The problem today is too many businesses grow quickly simply by buying another business. But they also buy that company’s problems. Why has Whole Foods seen a steady decline? What can they do about it? Those are the questions that the new owners (leaders at Amazon) will be asking and if Whole Foods through it’s current leadership cannot turn the company around, there will be executive leadership changes and most likely changes to the business model itself.

A takeover of this size is a very new territory for Amazon, so we’ll just have to wait and see if it’s successful.

David Livingston
Guest
8 days 1 hour ago

People shop Whole Foods for the experience. But lately they have overbuilt, panicked when sales did not increase like in the past, and then tried the failed 365 concept. Amazon won’t be able to expand the experience but they will be able bring the products to the rest of the country. Whole Foods is generally in large metro areas, very high income areas, near a major university or medical center complex. These are not “B” locations but rather prime real estate. Where else would you want to be? Whole Foods brings with a lot of retail and real estate expertise. Still, look for a lot of layoffs of redundant employees.

Gib Bassett
BrainTrust

Whole Foods will become a test bed for all of what Amazon has been wanting to test in physical retail at scale. To really understand and scale ideas like Amazon Go, Amazon needs access to real physical retail businesses and this is a fast path. Amazon then has the ready platform and real estate assets to scale what works and continue their retail growth path by taking share from slow moving traditional grocery retail. It’s starting to get a bit cliché, but retailers like those in the supermarket space need to start thinking more like technology and information companies. Otherwise, the lack of other businesses to hedge against like Amazon has will result in wishy-washy efforts that don’t yield any gains and the outcome becomes inevitable.

Herb Sorensen
BrainTrust
Two things: Amazon Go, and “As long as people live in brick-and-mortar houses, they WILL be shopping in brick-and-mortar stores.” I have written extensively on this subject since at least 2005, when I did a presentation on “The Amazonification of Walmart.” Unfortunately, Walmart never caught on. And then with “Selling Like Amazon… in Bricks & Mortar Stores!” I pointed out the incredible operational (relative to shoppers) similarity between Costco and Amazon. Last year, a senior manager at Costco announced that they were not going to make a major focus of their online operations, and then in the past few months the message was reversed and they ARE going to make a major focus on integrating their online AND brick-and-mortar operations. It is still early times in the total revamp of brick-and-mortar retailing and the INTEGRATION of bricks with clicks. It looks like the cutting edge of that integration is now pretty well in the hands of Amazon. At least they are working on the REAL problems: “rat maze” stores with massive “parked capital.” Our merchant warehousemen (brick-and-mortar retailers) relying on unpaid stock pickers (shoppers) have spent a century relying on their suppliers to generously fund those massive stores, with massive… Read more »
Jon Polin
BrainTrust
A few quick implication for grocery: Technology is the obvious starting point. While it is too early to know how Amazon will leverage an instant 435 distribution points nationwide, it is clear that they will. An industry with many executives trying to ignore the technology changes around them can do so no longer. Chains that do not aggressively and boldly embrace digital initiatives — big ones, not simple IT plans — will be dead within two years. Chains like Walmart, Kroger and HyVee, which have been making impressive strides with technology, are best positioned to withstand the increased technology pressure. Pricing. Amazon, even as a public company, has a long history of tolerance for losses on their commerce business. In an industry in which margins are as fragile as they are within grocery, Amazon may put further pricing pressure on the industry overall through reduced pricing on core merchandise, as well as low pricing on services such as e-commerce. It’s unclear which chains are positioned to withstand increased pricing and margin pressure. Brand. While there is little or no evidence that U.S. consumers have an issue supporting the Amazon brand, natural and organic grocery may prove the exception. Are at… Read more »
Ed Rosenbaum
BrainTrust

Who knows what to expect when you wake up each morning. Normally it is some tweet meant to be more derisive. But now we wake up to Amazon moving into new territory that is going to shake up old-world retail for a long time after the dust settles. I can see Amazon’s motives; but what is surprising is Whole Foods being the target. Certainly there are more better-managed and more profitable operations. But what do I know? I am sitting here typing and Amazon is out there buying businesses and becoming more profitable.

Alex Senn
BrainTrust
While with this acquisition it is tempting to look at the distribution, it yet again will come down to data and demographic. Whole Foods has an audience of people in the high end of the spectrum. Because of the price point at a Whole Foods, people buying there typically have a higher income/net worth. This being said, the grocery category is heated and huge. Capturing the high-end customer base which is Whole Foods presents many more opportunities to “get into” these consumers homes. Soon each Whole Foods will deliver straight to your house and oh, by the way, all that other stuff you need, just add it to your Amazon cart and it’ll be there about the same time. This presents an offensive move to get into a segment of high-value buyers more directly. Given the information Whole Foods must have on their customer base, it’s clear to see that Amazon will use this data with their AI algorithms. They will correlate all the purchases within your regular Amazon account, the foods you eat through Whole Foods, your location and will begin to understand your needs on a regular basis to the point where your cart will fill itself and… Read more »
Shawn Harris
BrainTrust
This acquisition gives Amazon access. Access to products, industry talent and even more operational knowhow re: perishables management, which they have been building and would have to spend too much risky money to continue to scale in-house. This is a move to accelerate their grocery ambitions. From a brand promise perspective, Whole Foods aligns well with Amazon; I can envision Whole Foods’ prices getting the ax, which will be good for consumers and bolster traffic. It also fits Bezos’ acquisition thesis: 1.) Customers love it; 2.) It can scale; 3.) It has a healthy ROIC; and 4.) It’s durable over time. Amazon Fresh is a sold service, which I believe will stay separate but be leveraged by this business. What does this mean for Instacart? These stores will likely get the Amazon Go treatment once they’re ready for prime time. Also, regarding the argument that stores are not “dead” based on what Amazon just did; well, Amazon is not buying all retailers. The de-materializing impact of digital will continue to manifest itself as Amazon and the like and take more share. I don’t believe stores are 100 percent going away, but a material number of stores will disappear, thus having… Read more »
Lee Peterson
BrainTrust

As an avid user of both brands, I’m pretty excited! Whole Foods at my door? A dream come true — although I do enjoy their physical customer experience. These are called “good problems.”

Aside from that, it’s just a brilliant move IMO. Solve the grocery dilemma by going to the top. Biggest win-win of the century so far.

George Anderson
Staff

A mashup of Amazon’s Go concept with 365 by Whole Foods seems like a good experiment here. Echoing Stefan, I bet the folks at Instacart are feeling at least a little nauseated this morning even though they just picked up Wegmans.

Roy White
Guest
8 days 1 hour ago

We need to get used to this because it’s going to be the new order of the day. It’s called the integrated retail model, in which companies effectively engage in both online and brick-and-mortar retailing. Amazon is buying Whole Foods outright and totally. Alibaba has just weeks ago acquired an 18 percent stake in a 3,600-store Chinese chain, LianHua, and this follows its purchase of a position in Sanjang Shopping Club, a Chinese discount supermarket. I believe the online companies are also looking at these moves more holistically than the brick-and-mortar merchants. For example, they may well be looking very carefully at the analytics to see what consumers will be buying online and what they will go to the store for. And, of course, Amazon is getting a professionally-operated if very troubled — chain with beautiful stores.

The culture clash as this acquisition integrated into Amazon is going to be fascinating, especially with John Mackey remaining at the helm of what will be Amazon’s Whole Foods subsidiary. What’s the next shocker in the retail arena? Will Walmart buy Amazon? Retail is getting crazy and going to be crazier for some time to come.

Lyle Bunn (Ph.D. Hon)
BrainTrust

The Amazon acquisition of Whole Foods is a natural fit for the following reason: Constant consumption of a quality brand product served by locations and logistics that enable physical and online commerce. It helps that While Foods never entered the race-to-the-bottom pricing competition.

But Amazon observers will also note the rumors of land purchases. The local grape vine buzzes at the prospect of 4,000 new jobs in Cape Canaveral, Florida supported by the Amazon acquisition of land there.

Amazon gets as much support from Wall Street as they get from their analytics focus. Wall Street loves announcements. The more and bigger the better. Amazon is demonstrating with the Whole Foods acquisition that they have certainly arrived at a time of making big announcements.

Whoever said “just follow the money”?

William Hogben
BrainTrust

Until now the grocery space was largely insulated from tech competitors — they had to get footprint and traction with customers, and they had to lose money all the while.

Now Amazon has kicked off the great race towards grocery 2.0 — it’s going to be tech-driven, customer experience- (and convenience-) driven and it’s going to be much much faster than most in the board rooms of the grocery giants expected. I hope the industry will take this as a wake up call that 2+ year tech investigations need to be replaced with rapid piloting and experimentation. I hope we won’t see Amazon wipe the rest of the grocers out — I love my local grocers.

Dick Seesel
BrainTrust

I echo a lot of the other panelists: The move can help grow Amazon’s brick-and-mortar footprint, but it’s more about taking the Whole Foods brand to every household in America that may order groceries from Amazon. It gives Amazon’s fresh food businesses (meat, produce, organics) instant credibility in homes without a Whole Foods location in sight.

As to the skeptics about whether Amazon can handle the logistics — can they deliver organic produce and Cheerios at the same time — this is the smartest logistics management company in the world that we’re talking about.

Finally, Amazon has a longstanding willingness to lose money in a new business where it is trying to grow market share. The days of “Whole Paycheck” may be over.

Patricia Vekich Waldron
BrainTrust

Why are we surprised that Amazon is buying Whole Foods when Walmart has acquired Jet.com, ModCloth and is acquiring Bonobos?

Mel Kleiman
BrainTrust
8 days 35 minutes ago

The world of food retailing just changed and in some cases brick and mortar is still important.
Just remember that Amazon owns Zappos, yet other shoe retailers still exist and thrive.

Ryan Mathews
BrainTrust
Well, answering the questions, rather than the questions behind the questions, the answer to the first one is that John Mackey has just solved his activist investor problem, gained a potential substantial cash infusion and will — for the short-term — carry on as usual and sleep a little easier. Now, as to the second question, I think I’d restate it as something like, “What will ownership of a major retail food chain mean for Amazon’s future plans to do to food what it has already done to books and so many other categories?” The answer to that question is that this is a total game changer, and could accelerate the beginning of that predictable end so many traditional retailers have been reluctantly trudging toward by thinking too much about what foolish constructs like “omnichannel” will mean, and not enough about how much the world, and their customers, have already changed. For established category players like Kroger, this is going to require erasing all the current white boards and approaching retailing with genuine creativity, a real commitment to modernity, a radical recommitment to innovation and a profoundly different understanding of the “Four Cs” — change, customers, consumers, and competition. Anything… Read more »
Vahe Katros
BrainTrust

…”this is going to require erasing all the current white boards and approaching retailing with genuine creativity, a real commitment to modernity, a radical recommitment to innovation and a profoundly different understanding of the “Four Cs” — change, customers, consumers, and competition.”

Ryan channeling Churchill. Very nice.

Ryan Mathews
BrainTrust

Vahe — it would have been really Churchillian if I suggested Kroger, “Never surrender. Never surrender. Never Surrender. Never surrender.”

Anne Howe
BrainTrust

The ultimate disrupter has done it again! And just in time to set a new path for shoppers to get what they want, fresh foods, when they want and how they want!

Bill Hanifin
BrainTrust
Two things come to mind regarding the deal announced today between Amazon and Whole Foods: 1. Most stories in the press that I have read are sharing the view that “Whole Foods Market stores and its headquarters operation won’t look much different after the sale.” I would bet on the veracity of that statement for about 12 – 18 months, but after that, the leadership, structure and overall operational persona of Whole Foods will be drastically different from what we see today. 2. There are multiple opportunities to “win” for Amazon and Whole Foods. For Whole Foods, they may add efficiency to their supply chain to bring down the prices of healthy food products and shed the image of “whole paycheck.” Just read the funny tweets about the sale today and you’ll see how strongly painted the brand is with that imagery. For Whole Foods, they may be the first to democratize healthy eating. While many consumers are interested in eating better and taking care of their health, it is not affordable for most. This model may finally change. For Amazon, instead of experimenting with Kiosks and pop-up stores, they will have an instant brick and mortar footprint and can… Read more »
Shep Hyken
BrainTrust

The grocery industry is about to change! Amazon may cause some disruption, but I believe they will raise the bar for the industry and consumers will be the beneficiaries.

Kenneth Leung
BrainTrust

Certainly gives the Amazon Fresh strategy a new boost with the store coverage, access to Whole Foods’s vendor relations and private label goods, and access to a customer base that is following the lifestyle. The key will be the details, how does Amazon run Whole Foods in a way that doesn’t alienate their core base, yet inject the Amazon supply chain capabilities, and integrate Amazon Fresh to Whole Food’s delivery and store pickup system.

Chris Bryson
Guest

Grocery has been the hardest category for Amazon to break into, with just 10% of consumers using its site for grocery and household (compared to 51% buying electronics and small appliances). They’ve realized the need for a physical store presence to truly compete in this sector, understanding that the modern shopper is looking for not just convenience, but choice. Unata’s data across our retail partners is consistent with this, with their collective shopper base using a mix of all three options — in-store + delivery + curbside.

The physical store is not going away, and this is Amazon’s acknowledgement of it. This acquisition will allow them to greatly expand their overall business by attracting new customers and making them truly multi-channel. And this will put significant pressure on the traditional players in the industry to expand into eCommerce in order to keep pace.

Craig Sundstrom
Guest

Hard to say what will happen … will Amazon influence Whole Foods, or will it be the other way around Presumably this will intensify both Amazon’s movement into food, and WFM’s movement into online sales — actually this transaction by itself means the first has already happened — but only time will tell how much the latter remains a “stand alone” business. With two formidable egos involved, the potential for conflict seems large.

Min-Jee Hwang
BrainTrust

I find this acquisition fascinating from pricing and brick and mortar perspectives. Amazon has historically prided itself on its loss leader image, whether or not this is still true. Yet they’re acquiring a grocery chain that is generally on the higher end of the spectrum. This shows Amazon’s interest in diversifying their reach and expanding their physical presence. They’ve been opening up their own bookstores slowly and methodically, but being able to sell Amazon products in the hundreds of Whole Foods locations would give them immediate advantage. They’d gain access to foot traffic instantly, instead of having to continue the painstaking process of testing and opening their own stores.

Ricardo Belmar
BrainTrust

This move by Amazon shows us how seriously they are going after the grocery segment. There is no longer any doubt that after attacking apparel, they intend to disrupt and pursue the grocery segment intensely. We can also settle the debate as to whether or not we should call Amazon a “traditional retailer.” While Whole Foods is not having as much success as they once did, this gives Amazon a strong foothold to make good on many of their experiments ranging from drone delivery, Amazon Fresh Pickup, etc. Let’s not forget Amazon’s strengths in logistics and delivery/shipping. This acquisition will only help them further deepened their strengths in creating new delivery models. It’s a jumpstart they can leverage dramatically. I would not be surprised to see a rebranding of some Whole Foods stores into Amazon Fresh stores either. This will certainly be interesting!

Jett McCandless
Guest

This is definitely exciting news for people in the logistics space. Having just ordered groceries from Amazon Fresh, and being particularly impressed with their accuracy hitting the delivery window, I think it’s clear that Amazon plans to use Whole Foods to follow the “mini distribution center” model that brick and mortar retailers are transitioning to in order to ramp up their eCommerce initiatives. Perhaps ironically, Amazon was the catalyst for retail making that shift, and now they’re participating in it on this level.

Dave Nixon
BrainTrust

Amazon’s big move will not only allow them to be in the brick and mortar business but will cause traditional retail disruption for everyone else. This will cause transformation and revitalization in the retail sector when Amazon starts rapidly deploying big ideas and new ways to make retail great again. Unfortunately, those that do not have the ability to follow or adapt, will be gone. Good news for retail in my eyes.

Tony Orlando
BrainTrust
Amazon is poised to be the largest retailer in the world, and Walmart in second, as this deal turns up the heat for many other retailers. To me this is where Amazon wants to go, without all the fuss of doing this alone, and Whole Foods is perfect for their next conquest, which is the high end consumer. They have the best logistics, and by adding all these stores that are already in high income areas, I look for Amazon to crush the local “foodies” stores and many others like them. Kroger and other fine, high end supermarkets that are trying to get into the game are seeing a giant roadblock, so it just isn’t the locals but large chains will feel the pinch as well. The Uber and Lyft drivers will also see their opportunities for extra money for food delivery go down in these areas, as Amazon wins every time, with better equipped vehicles, to do perishables the right way. Retail isn’t for sissies, and Amazon will continue to seek more and more retail companies that are undervalued and scoop them up to increase their distribution network wherever they can. Only 7 more years to retire and I… Read more »
Mihir Kittur
Guest

The future will be all about Amazon Go. In the next two years, we’ll see Whole Foods stores around the country remodeling themselves into high-tech distribution centers, where customers can pick up their online orders placed with the app or with Alexa, and then skip the checkout line entirely. Amazon had previously been experimenting with this on a very limited basis and can now deploy the strategy on a much larger scale.

marc faucher
Guest
7 days 20 hours ago

The real winner from today’s Whole Foods acquisition is the consumer. Amazon can now offer consumers a true omni-channel shopping experience that spans online, delivery, pickup and now in-store, enabling them to shop whichever way they want to, whenever they want to, with ease and convenience. This is the type of shopping experience they expect, and the type of shopping experience that will become mainstream as a result of this acquisition, furthering the expectation from consumers that this is how it should always be. This raises the bar for all mid market and independent retailers to come forward with a competitive market offering that supports in-store, curbside and home delivery options. Fortunately, there are vendors in the marketplace that can help address those needs.

Liz Crawford
BrainTrust

Amazon will have a new set of retail skills to acquire — the U.S. grocery business isn’t easy (ask Tesco). But even so, the company has proven they are adaptable if nothing else.

I think the stock market reaction told the story: Kroger down, Amazon/Whole Foods up. However, I am not sure this retailer will take much share from Walmart. I believe that shoppers from Target, Costco, Safeway and even regional players like Wegmans will drift toward Amazon/Whole Foods. These shoppers are looking for high quality merchandise as well as convenience. They are tech savvy and ready to adapt their habits to get what they want — just like Amazon itself.

Franklin Chu
Guest

Amazon’s acquisition of Whole Foods catapults the e-commerce giant into the grocery sector by swiftly expanding its Amazon Go, Amazon Fresh and private label grocery offerings. It is very exciting to see the collaboration between the online giant and a brick-and-mortar leader with 400+ stores. With Whole Foods’ respected reputation and passionate brand advocates, Amazon can make the grocery chain more customer-centric with leading-edge technology and data to enhance the customer shopping experience. This acquisition will be a win-win situation for both of the giants and the perfect example of omnichannel leadership.

China’s tech giants Alibaba and JD.com have invested heavily in offline grocery stores, making China the world’s largest online grocery market, far ahead of the U.S. Pure e-commerce and offline players may face difficulties in the future as consumers’ expectations have changed and now omnichannel is the key to succeed.

Nick Foy
Guest
Amazon’s purchase of Whole Foods is not a surprising one. It’s a natural move for Amazon to go after a greater share of the household spend, and grocery is, for many of us, the third largest spending category (after shelter and transportation). However, there’s a long way to go to achieve the same ubiquity in grocery as Amazon has created in just about everything else, with less than 2% of US grocery revenue being spent online. Buying Whole Foods brings other immediate benefits such as physical footprint, a big priority for Amazon as it increases last mile options and finds ways to get product to you faster. Then there’s scale — Whole Foods has less than 1% of grocery market share in the US, but it’s 1% of a very big number and that’s attractive for buying power and increasing selection, both strategic priorities for Amazon. It will also be interesting to see how Walmart reacts to this news. The company is potentially Amazon’s only real direct competitor, yet they have not been able to capitalize on the online market, despite being the largest grocer in the U.S. This news may be a major catalyst for the company to accelerate… Read more »
wpDiscuz
Braintrust
"I think Whole Foods will eventually turn into an Amazon Fresh/Amazon Go hybrid."

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