Could Amazon's Whole Foods takeover happen here?
- Author: Zachary Reyes Jun 23, 2017,
Jun 23, 2017, 11:18
Amazon.com's plan to buy Whole Foods Market Inc. sparked an avalanche of discussion about how the online retail giant could transform the US grocery industry in the years ahead. It's expected to be completed in the second half of the year. Shares for other retailers, like Target, have also been down since Amazon first announced the deal on Friday.
"Some say the goal for Amazon is shed whole foods pricey image - and with that could mean job cuts - so far Amazon has denied that there will be any layoffs". The company hasn't said whether that thinking changes under Amazon.
For years now, the name Whole Foods has been synonymous with high-margin health food.
IBD'S TAKE: Amazon.com has bounced off its 50-day moving average following the news that it's buying Whole Foods, but is a bit extended for a secondary buy.
For starters, the tie-up between Amazon and Whole Foods will likely hurt local grocery stores, Rep. Ro Khanna (D-Calif.) told CNBC Monday morning.
Spinning off a separate brand and using Amazon's technology and customer data, while leveraging Whole Foods' logistics infrastructure and knowledge of the grocery industry could help keep the grocer's flagship brand pure with its core customers while letting Amazon capitalize on its grocery ambitions.
"Many will do anything to either make this acquisition more costly for Amazon, or prevent the asset from landing in Amazon's lap", Short wrote in a note to clients. That's because Amazon poses such a competitive threat, especially when it comes to putting downward pressure on prices and profit margins. Walmart, which has the largest share of the US grocery market, is ramping up its grocery services as a way to fuel online sales. "ORCRP016487-topic.html" class="local_link" >Wal-Mart Stores Inc. Amazon shares ended up 0.8 percent at $995.17.
An Amazon spokesman declined to comment on the town hall.
At the all-hands meeting, Mackey said that Amazon may launch other supermarket brands with lower standards and prices once the companies complete their merger.
Haeggquist & Eck, LLP a shareholder rights litigation firm, is investigating the proposed sale of Whole Foods Market, Inc. Whole Foods recorded ~$16B in sales during 2016.
Whole Foods now has 431 stores nationwide ― and it is a beloved option for organic produce and local products already.
Amazon has been dipping its toes in groceries since it launched its Amazon Fresh delivery service a decade ago in Seattle, and expanded it to California, New York, and the Philadelphia area. That might result in a rival offer for Whole Foods, analysts said.
Mackey expects Whole Foods to adopt the Amazon mantra focused on long-term growth and a better customer experience rather than concerns for short-term profits that please investors.