Amazon to buy Whole Foods in $13.7 billion deal

EMBED </>More Videos

Amazon is making a big bet on physical stores and the business of food, but how will the change affect consumers? (WLS)

Amazon is making a big bet on physical stores and the business of food, but how will the change affect consumers?

The online retail giant announced Friday that is buying organic grocery chain Whole Foods for $13.7 billion in cash.

Amazon said it will continue to operate Whole Foods stores under that name as a separate unit of the company.

Whole Foods Market CEO John Mackey said in a statement on Friday, "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 acquisition may mean bad news for other grocers.

"The initial reaction of competitors like Costco, Walmart, Supervalu, was negative, because it's kind of a scary thing for investors in those entities. My guess is that probably it will mitigate a little bit," said Micronomics Managing Director Roy Weinstein.

But it could be good news for consumers.

"I shop mostly for price, so if the prices are reasonable, if they are even cheaper, I'll keep shopping," said Whole Foods customer Otis Smith.

"I think if they are making things cheaper that's great, if that's actually the outcome of it. It would be awesome. I love to shop here but not all the time because it's so expensive," said Whole Foods shopper Kate Cushing.

EMBED More News Videos

Amazon is making a big bet on physical stores and the business of food, but how will the change affect consumers?



Supermarket guru and food industry analyst Philip Lempert predicts it will mainly mean good things for the customer.

"What I think we are going to see, knowing that Amazon stands for value, is we are going to see lower prices at Whole Foods, that's been the biggest barrier," said Food Industry Analyst Philip Lempert.

Lempert believes this will also open the door for Amazon to offer more delivery options for groceries in the area, which could be bad news for Peapod, and Amazon will also offer more click and collect options - meaning, buy online and pick up at a location near you.

"I think what we are also going to see in the new Amazon Whole Foods is a push for more store brands similar to what Aldi does where 90 percent of the products are their own brands. I think we are going to see that move because Amazon has been pushing its own brand online for beverages and foods," said Lempert.

The deal shows Amazon's interest in moving into the business of operating traditional brick-and-mortar stores, even as traditional retailers crippled by Amazon's growth have announced a series of store closings.
It also shows Amazon's growing interest in groceries. And it demonstrates the financial might of Amazon, whose market value is greater than that of the 12 largest traditional general retailers combined.

"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.

CNN contributed to this report.

Related Topics:
businessamazonwhole foodsbusinessu.s. & world
(Copyright ©2017 WLS-TV. All Rights Reserved.)

Load Comments