Amazon to buy Whole Foods for $13.7 billion, wielding online might in brick-and-mortar world

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Amazon to buy Whole Foods for $13.7 billion, wielding online might in brick-and-mortar world

A Whole Foods Market is pictured in the Manhattan borough of New York City, New York, U.S. June 16, 2017. REUTERS/Carlo Allegri

Reuters

Amazon.com Inc said on Friday it would buy Whole Foods Market Inc for $13.7 billion, in an embrace of brick-and-mortar stores that could turn the high-end grocer into a mass-market merchant and upend the already struggling U.S. retail industry.

Amazon used aggressive pricing to become an e-commerce retail juggernaut and has recently been experimenting with brick-and-mortar outlets. It will take over a natural and organic grocer pioneer with 456 stores, a mecca for young, high-end shoppers, that has been struggling to rein in prices and integrate technology.

The deal represents a dramatic turn in strategy for Amazon, which has offered food delivery through its Fresh service for a decade but has not made a major dent in the $700 billion grocery market.

“The ramifications for all of retail are seismic – not just retailers that sell grocery, but for everyone,” Gordon Haskett analyst Chuck Grom said.

For graphic – Whole Foods at a glance – click: tmsnrt.rs/2skJDSv

Shares of dozens of supermarkets, food producers, payment processors and shopping malls collectively lost at least $35 billion in U.S. market value on Friday as the news reverberated across financial markets.

Shares of grocer Kroger Co swooned 9.2 percent, while Wal-Mart Stores Inc fell 4.7 percent, signaling fears that Amazon could broaden Whole Foods’ product mix and cut prices.

Amazon’s shares rose 2.4 percent to $987.71, adding $11 billion to its market capitalization, which in one sense makes the acquisition nearly free for Amazon shareholders.

“Supermarkets will now have to contend with not only competition with each…Read More & View Video

Lakeem Khodra
Lakeem Khodra
News Writer/Contributor at Tyranny News @lakeemk

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