Retail Watchers

The title says it all:

Amazon is buying Whole Foods in a deal valued at $13.7 billion

Among the important points:

Amazon to acquire Whole Foods for $42 a share, in a deal valued at $13.7 billion.
John Mackey will remain CEO of the grocery store chain.
The deal is expected to close in the second half year.

Holy Crap!!!
And......go!

Definitely a game changer, though how they'll integrate with Amazon.com is unknown. Maybe 365 brands will show up on Amazon Fresh...and the 365 stores are probably going to be rebranded to Amazon.com-based minimarts, possibly staffless (maybe). That being said, I would've preferred if they went private...but Amazon is better than Kroger or Albertsons buying them.

I wonder how the CPG manufacturers that Amazon tried to convince to go with them directly instead of through bricks-and-mortar retailers are feeling about this now that they'll be selling competitive products through a traditional retail channel.

Wouldn't it be wiser for Amazon to buy regional grocery chains to integrate into their system instead of Whole Paycheck...whose prices and attitude turns off many shoppers

jamcool wrote:Wouldn't it be wiser for Amazon to buy regional grocery chains to integrate into their system instead of Whole Paycheck...whose prices and attitude turns off many shoppers

The remaining regional grocery chains that haven't been bought up by Albertsons or Kroger, or are private companies who aren't going to sell out, is a dwindling number and those that are independent aren't particularly strong in their markets.

I guess they could've gone for Albertsons, giving Amazon a nice base of urban markets and integrating Amazon Fresh with the existing ABS/SWY delivery services, as well as giving Albertsons an amazing opportunity at expanded general merchandise selection. Probably about the same pricetag as well...Albertsons sold most of its stores to SuperValu for nearly $10 billion in 2006 dollars, with the remaining divisions and inflation accounting for the rest.

jamcool wrote:Wouldn't it be wiser for Amazon to buy regional grocery chains to integrate into their system instead of Whole Paycheck...whose prices and attitude turns off many shoppers

The way I see it, WFM gives them a near-national, coast-to-coast instant footprint. Similar to Walmart. See the connotation there....

pseudo3d wrote:The remaining regional grocery chains that haven't been bought up by Albertsons or Kroger, or are private companies who aren't going to sell out, is a dwindling number and those that are independent aren't particularly strong in their markets.

This is true, because Albertsons already tried.

pseudo3d wrote:I guess they could've gone for Albertsons, giving Amazon a nice base of urban markets and integrating Amazon Fresh with the existing ABS/SWY delivery services, as well as giving Albertsons an amazing opportunity at expanded general merchandise selection. Probably about the same pricetag as well...Albertsons sold most of its stores to SuperValu for nearly $10 billion in 2006 dollars, with the remaining divisions and inflation accounting for the rest.

In most Wall Street cirlces, ABS is seen as a darling, even though they're losing money. To the general public, they are a sinking ship taking on water faster than the Titanic. I suspect that has a lot to do with that.

OMG is all I have to say. I would never have expected this.

Amazon under Jeff Bezos' leadership is a company that thinks outside of the box and has no fear. There is just no way for us to know what vision he has for Whole Foods. If this deal goes through there will be big changes in this industry in the next few years. Should be fascinating.

jamcool wrote:Wouldn't it be wiser for Amazon to buy regional grocery chains to integrate into their system instead of Whole Paycheck...whose prices and attitude turns off many shoppers

Even though there are many regional grocers left to buy, integrating a patchwork of disparate companies who run disparate systems and have stores in varying degrees of repair would be a nightmare. Besides, WFM gives them something they don't have - access to a well-known organic/natural brand that the can sell online.

I think this is a great move for Amazon and a great move for Whole Foods. Whole Foods will be a pretty small piece of Amazon in total so it will no longer have to deal with the pressures of Wall Street. Amazon also gains a very solid foundation from which to run a fresh foods business; buying, logistics, private label program, marketing, etc. Whole Foods is also a strong brand but it is not a mainstream brand so it will be interesting to see how Amazon handles that part. In any case I think the markets over-reacted and very unfairly punished retail and grocery in trading both here and even across the pond.

I guess that Amazon deal with buying from Sprouts in Denver is going to be going away...

Or maybe Amazon can buy Sprouts too...

storewanderer wrote:I think this is a great move for Amazon and a great move for Whole Foods. Whole Foods ...will no longer have to deal with the pressures of Wall Street. ...

This is very true and very meaningful. I work for a large financial institution that is owned by a Japanese financial institution. Although we are subject to scrutiny by our parent organization and, of course, government regulators, we do not have to bow to the whims of Wall Street. Having worked for both publically-traded and privately-owned companies, my experience is those that do not have to bow to Wall Street are more successful at delivering products and services.