In the first quarter this year, food-and-drink sales at American brick-and-mortar stores were down by nearly $3 billion even as grocery trips rose, according to market research firm Nielsen. It operates approximately 456 stores in the United States, Canada, and the United Kingdom.
Whole Foods, which has built a following that buys its organic meats, produce and other items, is in a strong position to persuade shoppers to place orders online and let store employees do customers' marketing for them, he said.
"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", said Jeff Bezos, Amazon founder and CEO, in a statement. "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades".
Amazon's desire to become the biggest grocer in the world got off to a good start on Friday when it announced the acquisition of Whole Foods Market for $13.7 billion. (NASDAQ:WFM), shopping center REITs tumbled more than their peers in the real estate sector.
Alina Gura of Newington who was visiting the Whole Foods store with her almost two-year-old daughter, said she appreciates the quality of the food, particularly its organic products. (NASDAQ:AMZN) "a launching pad not just for food but possibly drugs as well where customers aren't willing to wait even a day". Investors are likely anxious that Amazon, once entrenched in the physical grocery store business, will ruthlessly cut prices for food products like it did with books.
It's also been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.
"The first thing Amazon is going to do in this acquisition is to remove all those third party vendor services".
The Journal said the acquisition "could make Amazon an overnight heavyweight in the all-important grocery business..."
Almost $30 billion of market value disappeared Friday from grocery stocks. The transaction is expected to close during the second half of 2017.
Meanwhile, in a letter to its customers, Whole Foods Market, Inc. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer". The shares were trading just under that level in early trading, while Amazon's shares were up 0.9 percent at US$997.41. The stock is up more than 31% so far this year.
Grocery stores are under more pressure to compete based on convenience, especially as more retailers and startups introduce food options such as meal kits, low-priced snacks and organic groceries, according to a report released earlier this year by Jones Lang LaSalle, a commercial real estate firm. Year-to-date, the stock is up almost 39%.