Can Amazon persuade enough people to buy fresh food online?

Key Speakers At The 32nd Space Symposium

Inc. said yesterday it plans to buy struggling natural and organic food pioneer Whole Foods Market Inc.in a $13.7 billion deal that would give the e-commerce giant 430-plus brick-and-mortar stores to distribute fresh food and other groceries.

The acquisition is seen as a move by Amazon to more aggressively target the grocery section of retail has proven more stubbornly resistant to digital channels.

Whole Foods recently had come under pressure from activist hedge fund Jana Partners LLC, prompting it to overhaul its board.

Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more.

The deal had a dipping effect at the shares of other supermarkets, food producers, payment processors and shopping malls collectively of around $35 billion in United States market value on Friday as they received the news of the deal. SuperValu, with a network of 2,000 stores across the USA, took one of the biggest hits, with a 14% drop on Friday. Many stocks, including Target and Smart & Final Stores, were plummeting more than 10 percent before evening out later in afternoon trading. Kroger, which had been rumored late previous year to be considering a takeover of Whole Foods, was down 14 percent.

"This is an quake rattling through the grocery sector as well as the retail world", said Mark Hamrick, senior economic analyst for Bankrate.com.

Meanwhile, Whole Foods stock soared on the news, jumping almost 30 percent by mid-morning.


WalMart bought Jet, an ecommerce site trying to compete with Amazon, for $3.3 billion in 2016.

Though Amazon has opened a few physical bookstores, "this is their first entry into a scale brick-and-mortar type of business", Hardy said.

Amazon is already nearly dominating retail - the company's market share of the USA retail sector a year ago was estimated at 34 percent, while Walmart came second with 5 percent, according to Needham & Company's research in April.

A crowded local grocery market became more interesting - and probably more competitive - as online retail powerhouse Amazon announced Friday that it will buy organic foods specialist Whole Foods, which now has stores in Washington Twp., Mason and Cincinnati. Whole Foods is courting the discount shopper with its lower cost brand 365. Whole Foods will keep its brand and John Mackey, its current CEO, will remain in place.

Whole Foods Market CEO Mackey said, "This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers".

The companies expect the deal to close by the end of 2017, subject to approval by Whole Foods Market's shareholders and regulators.

Amazon has agreed to pay $42 per share in cash for Whole Foods, a 27% premium on the Austin, Texas-based grocer's closing share price on Thursday. And Amazon has said it would like to bag 2% of the United Kingdom grocery sales.

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