Grocery shopping - you either love it or hate it.
He said that even if Amazon gets 20 million members of its Prime loyalty program to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million not going to traditional supermarkets. He added that these are likely the higher-income households who tend to buy more expensive brands and cuts of meat. The grocery giants like Walmart, however, have so far managed to maintain their edge of having more stores nationwide, swiftly penetrating e-commerce, and establishing grocery pickup at many of those stores.
When Amazon was founded more than two decades ago, the internet was still in its infancy - but Jeff Bezos, the company's founder, had little doubt it was where the future of retail would be built. Shares of Whole Foods shot up 29 percent and closed at $42.68 amid the news.
Amazon will gain a footprint of 456 supermarket stores in North America and Britain with the acquisition of Whole Foods, boosting its delivery capacity and allowing it to compete directly with U.S. chains such as Kroger Co and Albertsons LLC.
In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance.
Amazon already offers grocery-delivery services in five markets, but analysts say expansion is tough because its current distribution centers are set up for dry goods, not perishables.
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"I think that this takes all of the pressure off Whole Foods and gives Whole Foods the opportunity to revitalize that business and of course it stems the criticism from all of these activist investors", said Neil Saunders, managing director of GlobalData Retail in NY.
With Whole Foods, Amazon gets an established business that it can transform through its technology and supply network expertise. But today's development will bring it more than 430 retail locations across the country, a substantial base from which it can expand its empire into the physical realm.
And Amazon could turn to dealmaking again. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too. Shoppers simply pick the items they want off the shelves and leave the store.
Amazon, known for its competitive prices, is trying to attract more low- and middle-income shoppers with its grocery push.
Since Whole Foods is a publicly traded company it could be scuttled if another bidder decides to offer a lot more money for the grocery chain.
Courtney Hiddeman and her family live right down the street from the Whole Foods "world headquarters" on Bowie Street in Austin.
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