Whole Foods CEO suggests grocer could spin off new brand under Amazon
- Author: Zachary Reyes Jun 26, 2017,
Jun 26, 2017, 7:18
"Every grocery store out there now is having a conversation about how much they can afford to spend to keep Amazon out of the space", said Brian Culpepper, a portfolio manager at James Advantage funds.
A $48-a-share price tag would be more than reasonable for a fellow retailer that could eliminate overhead at Whole Foods, Short said, while adding that very few companies could outbid Amazon. According to Madeline Hurley, IBISWorld senior analyst, this acquisition means Amazon will be able to reach more consumers than ever before. That's a significant five-fold jump from where sales are today, but to really accelerate the growth of its presence in this market, Amazon needed to make a big move. According to Kantar Retail, online sales accounted for only 2.0% of the more than $700.0 billion US (SPY) grocery sector past year.
For Whole Foods, it's an opportunity to rebuild its own reach at a time when the supermarket's share prices have been gradually declining following the announcement that it was closing nine stores earlier this year. It was truly love at first sight ...
Australian retailers are eons behind similar organisations around the world, but haven't been punished for their lack of adaptiveness due to no one willing to be the first to take a leap into the unknown. "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". Whole Foods' footprint is far smaller with about 440 locations, though those are mostly in urban and affluent neighborhoods where delivery might be more in demand. Even still, analysts were skeptical of the idea that Bezos plans sweeping changes that would damage the Whole Foods ambiance. That's a blow to rivals like Target and Wal-Mart, which boasted that physical as one thing they had over Amazon.
Mackey isn't saying the company's almost 90,000 employees are about to take a hit, but he's been very frank that there will be changes. And she said, "That's insane".
The smitten CEO called it a "whirlwind courtship", though he also admitted he had a dream 18 months ago that Amazon and Whole Foods would one day get together.
But Whole Foods has struggled in recent years, and the $33.06 price was about half where Whole Foods stock was trading at its peak in October 2013. Using machine learning and AI technology, similar to that of a self-driving vehicle, Amazon automatically adds the item to your cart and charges your account when you leave the store. He said they could not "consummate" the marriage until the deal was official, and that it was "not a Tinder relationship".