Daily Local News (West Chester, PA)

Stores in Exton and Newtown Square have sat for months waiting for their interiors to be fitted out

- By Brian McCullough bmcculloug­h@21st-centurymed­ia.com @wcdailyloc­al on Twitter

Foodies waiting for area Whole Foods stores to open may have found out the reason for the delays on Friday morning.

That’s when Amazon.com rocked the grocery world by announcing it is buying Austin, Texas-based Whole Foods for $13.7 billion.

The result, according to those who watch the industry, is a new player that could change the way Americans buy their groceries.

“This is definitely a disruptor to the industry as Amazon is making a big play by buying an existing store,” said Ernest Baskin, assistant professor of food marketing at Saint Joseph’s University in Philadelph­ia. “In particular, the large scale of Amazon and its technologi­cal expertise will be an important driver of innovation here and will likely bring important competitiv­e responses from the rest of the retail grocery industry.”

The proposed deal, which Whole Foods shareholde­rs still need to approve, unites the online juggernaut with the grocery store chain that fell behind as the organic and natural foods it helped popularize ex-

panded to more locations and shoppers found “good enough” alternativ­es.

Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more. Amazon also offers grocery shipments elsewhere, but that’s tough with perishable foods.

The deal has the possibilit­y to be “transforma­tive,” Moody’s lead retail analyst Charlie O’Shea said in a note, “not just for food retail, but for retail in general.”

The “implicatio­ns ripple far beyond the food segment, where dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks,” O’Shea said.

The announceme­nt may explain why at least two new Whole Foods stores in the region – in Exton and in Newtown Square – have not had interior fit out work done after their exteriors were constructe­d.

An official of PREIT said the operator of the Exton Square Mall is excited about news of sale.

“We view this as a good thing and a tremendous validation of brick and mortar as a valuable part of a retailer’s distributi­on channel,” said Heather Crowell, senior vice president of corporate communicat­ions and investor relations. “We believe work on the Exton location is set to begin in the near term.”

In an article Friday, West Whiteland Township Manager Mimi Gleason said Whole Foods had received its work permits two or three weeks ago, months after PREIT had finished the exterior shell. She said the work there was being done at a slower pace than normal.

Work had also stopped after the exterior was completed at a Whole Foods store in the Ellis Preserve developmen­t in Newtown Square.

A representa­tive of project developer Equus Capital Partners said in published reports he was not concerned about the delay.

“Whole Foods will open in Newtown Square,” Principal Steve Spaeder told the Philadelph­ia Business Journal. “If Whole Foods moves the date that they move in by a couple of months, it’s immaterial to me.”

Whole Foods is leasing both stores.

Whole Foods issued an email blast to its customers on Friday after the sale announceme­nt.

“Dear Valued Shopper,” the message begins, “today marks the beginning of an exciting new chapter in Whole Foods Market’s history with the announceme­nt that we’ve entered into an agreement to merge with Amazon.

“Amazon is an innovative company and we are excited about our partnershi­p. We believe it presents an incredible opportunit­y to take Whole Foods Market’s mission and purpose to new levels and will create significan­t value for our stakeholde­rs – including you, our most loyal customers.

“We want to assure you that Amazon shares Whole Foods Market’s deep commitment to quality and customer service. We will continue to operate our stores and deliver the highest quality, delicious natural and organic products that you’ve come to love and trust from Whole Foods Market ... Those standards are core to Whole Foods Market and we will remain committed to them.”

Baskin said the sale gives Amazon the chance to enter the grocery market full force.

“Rather than growing organicall­y and slowly, they can enter the market very quickly,” Baskin said. “While there will definitely be a variety of challenges to overcome in terms of integratio­n, I think it will be a net benefit to Amazon as it allows them easy access to valuable consumers, real estate and infrastruc­ture. In the future, I would expect to see integratio­n with correct Amazon technologi­es, from grocery deliveries with the Whole Foods stores acting as local hubs to potentiall­y Amazon Prime discounts to encourage traffic. Whole Foods may also be the place where Amazon chooses to roll out its developing technologi­es such as the ones used in the Amazongo concept store in Seattle.

“They will definitely continue to have brick and mortar stores,” Baskin said.

The investment firm Jana Partners said in April that it had built up an ownership stake in Whole Foods because it saw ways to address its “chronic underperfo­rmance for shareholde­rs.” Jana had pushed to shake up Whole Foods’ board of directors, among other changes.

Pressure from activist investors got so high that Whole Foods CEO John Mackey told Texas Monthly magazine recently that “they’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”

Mackey will stay as CEO, and the headquarte­rs will stay in Austin, Texas. The deal is expected to close later this year.

The Associated Press contribute­d to this report.

 ?? THE ASSOCIATED PRESS ?? Customers are seen outside a Whole Foods Market in Dallas.
THE ASSOCIATED PRESS Customers are seen outside a Whole Foods Market in Dallas.

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