Amazon announced today that plans to acquire Whole Foods Market for $13.7 billion. The deal involves buying Whole Foods’ debt and purchase its stock at $42 per share. According to the announcement, the supermarket will continue to operate under the Whole Foods brand and CEO John Mackey will remain in his position. The company will also retain its Austin, Texas headquarters. Obviously, the requisite approvals by regulators and shareholders are also necessary.
This news comes on the heels of the experimental pick-up grocery store in Seattle which seeks to combine machine learning and cameras to allow customers to simply walk in, pick up groceries, and walk out. Currently, Amazon already provides a grocery delivery service called Amazon Fresh in 16 cities, however, it doesn’t seem as popular as other endeavors. The purchase of Whole Foods gets Amazon front and center in brick and mortar stores. They could potentially use Whole Foods as a larger test bed for its experimental grocery concept and expand its own Amazon Fresh service.
The context of this acquisition is crucial however. With technology trending towards automation and the growing propensity for customers to purchase things online instead of going inside of store, Amazon entering the grocery store market has huge implications. In fact, they have been a large reason why people often buy things online instead of in person. Convenience is king when it comes to shopping. With calls by many in the U.S. to raise the minimum wage to $15 an hour, this trend towards online shopping and automation may do more to hurt those asking for higher wages, particularly those who work in grocery and retail stores. In fact, after the news of Whole Foods purchase by Amazon broke, the stock prices for several supermarket chains fell including Kroger and Costco. Regardless, it will be interesting to see how Amazon innovates in the supermarket space and what that will mean for shopping in the future. The deal is expected to close later this year.