Whole Foods Physical Stores Are Vital to Amazon's Grocery Success

Paterniano Del Favero
Giugno 27, 2017

Last month CNBC reported that Amazon was in serious discussions about breaking into the prescription drug business, and the move to acquire Whole Foods may be a strategic one, suggest some experts. They say what's on their mind. Whole Foods also declined to comment. Its biggest acquisition prior to the Whole Foods deal was that of Zappos.com for $1.2 billion. Amazon's Worldwide Consumer chief, Jeff Wilke, said at the town hall that Whole Foods' healthier options helped change how people think about food.

"It was truly love at first sight", Mackey said of meeting with Amazon.

It was on June 16 that Amazon said it has agreed to buy grocery chain Whole Foods Market for $13.4 billion, as the online retailing giant aims to dominate supermarket industry as well.

What this deal means for food manufacturing is unclear yet. Mr. Mackey, though, wasn't interested in selling.

HSBC has cut its target prices for the UK-listed food retailers in the wake of Amazon.com Inc's (NASDAQ:AMZN) surprise US$13.7bn takeover of Whole Foods Market Inc (NASDAQ:WFM), seeing the biggest impact on sentiment, while warning off investors from second-guessing the internet retail giant's possible United Kingdom plans. News of the deal has raised concerns that Amazon will tarnish the grocer by taking it downmarket.

Mackey's excitement was met with applause from the crowd of Whole Foods employees. "And she said, 'That's insane'". Meanwhile, competitors like Wal-Mart, Kroger, and Supervalu went down 7%, 14.5%, and 17% respectively. He then went on to describe his first meeting with Amazon executives in Seattle in May.

"We could have talked for 10 hours", he said. We just fell in love. Mackey told employees that his company and Amazon are "engaged", like a couple, but still waiting until their transaction gets regulatory approval.

Online grocery is expected to grow in the United States over the next few years, according to Hurley, with revenue increasing at an annualized 10.1 percent to $13.5 billion over the past five years. But like an old traditional marriage, where there are all kinds of rules and chaperones, we can't consummate the marriage until we're actually officially hooked up. "This is not a Tinder relationship".

"The grocery business is a huge market, and by tapping into that and leveraging their e-commerce dominance, Amazon is in a position to increase its brand awareness with customers beyond books and gadgets, and especially when it comes to making food choices", says Lim.

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