Whole Foods CEO John Mackey's Letter to Employees

June 16 (Reuters) - U.S. stocks fell on Friday as Wal-Mart and other retailers were slammed by Amazon.com's biggest foray into the brick-and-mortar retail sector with its $13.7 billion deal to buy upscale grocer Whole Foods.

Inside the stores, Whole Foods customers could see big changes, including easier checkouts. It also shows Amazon's growing interest in groceries.

Online delivery of groceries so far has been tough for any company to pull off because of customers' concerns about the quality of meat and produce, Wedbush Securities analyst Michael Pachter said.

Amazon is invading the brick-and-mortar space of Walmart as Walmart did to Amazon's online space.

Companies in the food business, he adds, are also under attack from another recent entry into the US grocery pace, German grocer Lidl.

But if Amazon can be the one-stop shop for everything - groceries had been one of the key missing elements - customers would have even less of a need to go to Walmart or elsewhere.

Its AmazonFresh delivery service, which has been slow to take off, accounting for 0.8% of all grocery purchases previous year.

"They're greedy bastards, and they're putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods", Mackey told Texas Monthly in a profile published this week". Whole Foods is courting the discount shopper with its lower cost brand 365.

Wal-Mart was just one of the many retailers whose stocks were impacted by the news that Amazon is acquiring Whole Foods.

The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's.

Both Amazon and Whole Foods cater to younger consumers including millennials as well as the affluent.

These early forays into groceries provide clues for what consumers could expect from a combined Amazon and Whole Foods, a deal expected to close later this year.

But despite the Whole Foods acquisition and, by extension, the potential technology Amazon could implement in brick-and-mortar outlets, the company said it now has no plans to automate the jobs of cashiers in Whole Foods stores after the acquisition.

"Amazon could bring technology to all Whole Foods locations or it could absorb Whole Foods into Amazon Fresh". It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees. The app would then have automatically charged whatever products they took out of the store with them to their Amazon account. The shift started within minutes of the announcement online retailer Amazon would taking over the grocery chain Whole Foods.

A combined Whole Foods-Amazon will face some formidable emerging competitors. "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.

"We have grocery stores that will be opening soon in Tustin, Irvine and San Gabriel, and we have three or four more locations we'll be opening that I can't say yet because the leases have not been signed yet", Brian Tademy, the company's senior field marketing director, said last month. On Wall Street, grocery stocks plunged on the news of the Whole Foods takeover deal.

  • Zachary Reyes