Economy

Potential Impact Of 'Game Changing' Move As Amazon Buys Whole Foods

Potential Impact Of 'Game Changing' Move As Amazon Buys Whole Foods”

"It's amusing. I was just ordering something on Amazon", said Nick Yezierski, a hotel manager who was eating breakfast outside the Whole Foods flagship store in Austin, Texas.

Mackey spoke at a town hall with Whole Foods employees after the deal was announced late last week.

"Mutual friends set us up on a blind date", he said about flying out to Seattle a little over a month ago.

Despite rumors that soon-to-be-owner Amazon might slash jobs by automating portions of Whole Foods stores, CEO John Mackey is stressing that the deal's still basically a match made in heaven. "And she said, 'That's insane.'" Mackey said, drawing guffaws from employees at a town hall meeting on Friday. Amazon Go shops are convenience stores that don't use cashiers or checkout lines, but use a tracking system that of sensors, algorithms, and cameras to determine what a customer has bought. Whole Foods is also among its partners, though the fate of their five-year contract may now be up in the air.

"I think retailers are going to have to bring a lot of excitement to the store", said Stew Leonard Jr., CEO of Stew Leonard's, a grocery chain with five locations in CT and NY. Those worries proved to be overblown, although Amazon has begun to add products to the site. Amazon's focus on frugality contrasts with Whole Foods, known to have higher costs than peer grocers. The company hasn't said whether that thinking changes under Amazon.

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Mr. Mackey appeared to jab at the investor pressure Whole Foods has been facing from activist investors including Jana.

Morgan Stanley analysts have also written in a report that Amazon's acquisition of Whole Foods "creates an entry point to drug delivery" and provides the necessary real estate. The company had purchased the sites to eliminate a dogged competitor and prevent the businesses from getting acquired by Wal-Mart Stores Inc. "I dreamed that we merged with Amazon", he said.

Here's more of what he had to say and how the deal came into being, from the US Securities and Exchange Commission transcript of his address. 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.

"This is not a Tinder relationship", he clarified.

Whole Foods used to be one of the leaders in organic and natural foods, but other chains have increased the availability of those products.

Aaron Turner, a Los Angeles-based analyst who covers Grubhub for Wedbush Securities, wrote in a note to clients Monday that the tech giant's plans to buy Whole Foods for almost $14 billion set it up for a larger food ordering and delivery play. It remains to be seen what Amazon's growth plans will be for Whole Foods. It has four "365 by Whole Foods Market" stores that are cheaper to build and operate than a traditional location and offer lower-priced items aimed at younger shoppers.



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