In a deal The Los Angeles Times describes as “dropping a bombshell on the U.S. grocery industry,” Amazon.com Inc. announced today that it has agreed to buy Whole Foods Market Inc. for $13.7 billion.
“The deal’s announcement instantly sparked a selloff in the stocks of other major U.S. supermarket and big-box chains on expectations that Amazon would bring its low-price expertise and technology prowess to bear with Whole Foods, putting further downward pressure on prices in the already hyper-competitive, $611 billion U.S. grocery industry,” The Times reports.
The report quotes Mark Hamrick, senior economic analyst for Bankrate.com, saying in a note to clients: “This is an earthquake rattling through the grocery sector. We can only imagine the technology innovation that Amazon will bring to the purchasing experience for the consumer.”
Austin, Texas-based Whole Foods operates 460 stores in the U.S., Canada and Britain, including about 85 in California, its biggest market, The Times notes. Amazon said it agreed to pay $42 a share for the company.
And, last night I saw a local news report about Amazon having a limited grocery delivery service in our area (Mpls/StPaul) and starting to expand it. I think this purchase will certainly compliment that service. But, I have never shopped at a Whole Foods. I went into one once, saw the prices, and walked right back out.
Amazon may be feeling a little heat from Walmart’s successful online grocery shopping program. The people I know who use it love it and Walmart obviously beats Whole Foods prices. You just pull to the curb and they put the groceries in your car.