Amazon deal rocks retail sector

Online retailer Amazon is expanding its footprint into Newark after announcing it was merging with Whole Foods Market, Inc in an all-cash deal valued at $13.7 billion.Bezos says the company has been doing a good job and “we want that to continue”, which means that there will be no immediate change in Whole Foods’ day-to-day operations once this deal is closed.The move comes at a challenging time for grocers. The Seattle-based company had net sales of $35.7 billion in the first quarter, which ended March 31, up from $29.1 billion in first quarter of 2016.Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more. Although Amazon’s plans for Whole Foods is not clear, the acquisition has some wondering what will happen to the chain’s existing stores.Online retail giant Amazon is making a bold expansion into physical stores with a $13.7 billion deal to buy Whole Foods, setting the stage for radical retail experiments that could revolutionize how people buy groceries and everything else. Indeed, shares in competitors sank in early NY trading. Those stores would solve much of Amazon’s “last-mile” delivery challenge for fresh groceries – perhaps the top reason it hasn’t made a dent in the grocery shopping of the 60 percent of millennials who buy other items from Amazon, he said.”Fresh foods are the final frontier for Amazon“, Portalatin said.The acquisition target: Whole Foods Market.The relationship between Instacart and Whole Foods dates back to 2014 but deepened in 2016, when they announced a new five year deal.”Amazon is really is trying to get into the grocery market, and they’re not only looking to do that online, but they’re looking to do that in the traditional retail brick-and-mortar market”, Hurley said in an interview.That could help Amazon cut shipping costs and give the company opportunities to sell even more products once in the store.At some of the Whole Foods 365 locations, the grocer’s discounted brand, consumers can use iPads to order food or find a bottle of wine.John Mackey will remain chief executive of Whole Foods Market, which will keep its headquarters in Austin, TX, and operate as a subsidiary of Amazon.The acquisition, which has not yet received approval from the shareholders of Whole Foods Market, adds a 27% premium to Thursday’s closing value of its stock. It wasn’t until 2015 that the number of pure grocery stores actually started to decline, according to government numbers, and then only slightly.The AP reported that Campbell Soup, Hormel, General Mills and Sysco shares fell between 3.2 and 3.3 percent, while United Natural Foods shares dropped 8.6 percent.