Amazon deal to buy Whole Foods could shake up Canadian grocery industry
- Author: Zachary Reyes Jun 17, 2017,
Jun 17, 2017, 18:22
He added that Whole Foods was faced with same-store sales declines for six straight quarters and "must have concluded that this is the best chance to turn that around". Meanwhile, the more than 460 Whole Foods stores in the U.S., Canada and the United Kingdom could be turned into distribution hubs - not just for delivering groceries, but also as pickup centers for online orders. Walmart, which has the largest share of the US food market, has been working on lowering prices, while Target has been struggling to turn around its grocery business.
"Just goes to show how competitive the grocery market is and also shows it's moving into more of a digital experience and online presence", said Charlie Dunn of Pyramid Foods, parent company of Ruby's, Price Cutter, and other grocery brands in the area.
"There's no value in Amazon keeping the status quo at Whole Foods". The grocery store operator was also under pressure from activist investor Jana Partners. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains.
The Whole Foods deal is scheduled to close in the second half of 2017, pending shareholder and regulatory approvals.
In the wake of the takeover's announcement on Friday, internet retail and web services titan Amazon is doing just fine.
Amazon used aggressive pricing to become an e-commerce retail juggernaut and has recently been experimenting with brick-and-mortar outlets.
It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.
With Whole Foods, Amazon gets an established business that it can transform through its technology and supply network expertise. Still, they've struggled to revolutionize the peddling of groceries in the same way they have literally everything else, and that might be where Whole Foods comes in.
MSCI's index of stock markets across the world rose 0.3 percent, while European shares added 0.6 percent, rebounding from recent losses. "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.
In the short-term, said von Massow, it's unlikely Amazon will steal customers from other Canadian grocers.
The Whole Food purchase price topped $13.7 billion dollars in cash.
"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA.
Amazon is also acquiring a company that's a customer of one its cloud rivals: Microsoft Azure. "We want more options to get what we want on the time frame we want it", Scroggins said.
Ryne Misso of the research firm Market Track said a customer who buys fresh fruit regularly at Whole Foods might be offered a deal on blenders and serving bowls.
Although Amazon remained tight-lipped Friday about its plans for the natural and organic food giant, a prototype grocery store the company opened this year in Seattle provides clues to its vision for the future: cashier-less shops where purchases are tallied automatically on an app instead of at a checkout counter.