For purist Whole Foodies, Amazon's takeover triggers downmarket angst

Amazon shares opened at $1,017, a record, although they later came down to around $1,000, up 1.28 percent from the close Friday, the day the $13.7 billion Whole Foods deal was announced.

Wall Street signaled Monday that it expects a rival offer for Whole Foods to surface, and many industry and merger experts agreed.

She predicts competitors will improve pricing, loyalty promotions and other inducements to try to keep customers from defecting to Amazon for pantry staples, dry goods and even fresh food. This was a savvy way to do that and it's expected that Whole Foods stores will be retrofitted to allow shoppers to buy online and pickup at their local store-a solution to the "last mile" expense of home delivery. More than 60 percent of Whole Foods shoppers are subscribers to Amazon Prime, and more than a quarter of Whole Foods customers already buy groceries on Amazon, according to the consumer research firm Magid.

It appears that the Whole Foods deal is the beginning of the endgame for Amazon. "I think that where Amazon may add the most value is to speed up the process of perfecting the 365 by Whole Foods model and scaling it quickly thanks to its greater resources". Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the USA, a brand-new laboratory for radical retail experiments that could revolutionise the way people buy groceries.

Jeffrey Bezos, founder and CEO of Amazon.com said "Whole Foods Market has been satisfying; delighting and nourishing customers for almost four decades - they're doing an unbelievable job and we want that to continue".

The investment bank led global M&A rankings last year and, based on year-to-date figures from FactSet, it's on pace to do so again this year-this time with a little help from Amazon and Whole Foods. She raised her price target on the company to $48 - almost 15 percent higher than Amazon's bid. There has been plenty of speculation that if Amazon really wanted to make a presence in the grocery space, it would need to do something major in the brick-and-mortar space. Amazon's focus on frugality contrasts with Whole Foods, known to have higher costs than peer grocers.

And there's no shortage of speculation about the ways the company could innovate and leverage Whole Foods locations to further its interests. Neither Mackey nor Amazon founder and CEO Jeff Bezos are saying.

"Whole Foods was late in realizing private label's opportunity because they were enjoying the growth of the organic market", said the Citigroup report "There is significant opportunity there for Amazon". In December, the tech giant unveiled plans for futuristic grocery stores that don't staff cashiers. The company has blamed the struggles on the wider availability of organic and natural food at traditional retailers, and said it is working on offering lower prices.

  • Zachary Reyes