A few months ago we looked at how increased competition has hurt sales at Whole Foods and slowed its growth in recent years. Faced with the possibility of shutting down stores, CEO John Mackey cleared five people from the board of directors, appointed a new chairwoman, and hired a new CFO. Executives even developed plans to cut costs while also improving operations.
Then suddenly everything changed: last week Amazon announced that it would buy Whole Foods for $13.4 billion. This deal takes an immense amount of pressure off of the upscale grocery chain, even though there’s no way of telling yet how this will alter the company’s long-term outlook. Meanwhile, Amazon’s purchase of Whole Foods represents a major push into the $800 billion American grocery industry. Experts think the deal might tie in with the e-commerce giant’s recent experiments with brick-and-mortar outlets. Along with opening a few physical bookstores around the country, Amazon also unveiled a convenience store that doesn’t need cashiers.
“The Whole Foods acquisition provides them more physical locations,” said Mikey Vu, a business consultant who specializes in retail. “They’re going to be within an hour or 30 minutes of as many people as possible.” Still, no one knows exactly how Amazon will update technology at Whole Foods’ more than 460 stores. What is certain, however, is that the Internet retailer purchased a grocery chain that earns more than $16 billion in annual sales. The deal sent Amazon’s stock price soaring while shares for companies like Target and Walmart plummeted. Stay tuned to see how this deal continues to affect the retail world as the years go by.
Questions:
- Do you think Whole Foods will continue to follow the long-term plans that executives made before the Amazon sale?
- Do you think Amazon will eventually automate the jobs of Whole Foods cashiers?
Source: Michael J. de la Merced and Nick Wingfield, “Amazon to Buy Whole Foods in $13.4 Billion Deal,” The New York Times, June 16, 2017. Picture by Robert Scoble.