Amazon deal likely to affect local shoppers
Whole Foods purchase could bring more competition to area.
A crowded local grocery market became more interesting — and probably more competitive — as online retail powerhouse Amazon announced Friday that it will buy organic foods specialist Whole Foods, which currently has stores in Washington Twp., Mason and Cincinnati.
Amazon and Whole Foods Market, Inc. said they have entered into a definitive merger agree
ment in which Amazon will buy Whole Foods for $42 a share in a cash transaction valued at about $13.7 billion, including Whole Foods Market’s debt, Amazon said.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Jeff Bezos, Amazon founder and chief executive, said in his company’s statement. “Whole Foods Market has been satisfying,
delighting and nourishing customers for nearly four decades.
They’re doing an amazing job and we want that to continue.”
The move comes at a challenging time for grocers.
In the first quarter this year, food-and-drink sales at American brick-and-mortar stores were down by almost $3 billion even as grocery trips rose, according to
market research firm Nielsen.
The grocery and supermarket industry in the United States is huge, with $12.2 billion in profit, but growing slowly, at a measured 1 percent pace, according to retail analyst IBIS World. Although Amazon’s plans for Whole Foods is not clear, the acquisition has some wondering what will happen to the chain’s existing stores.
Kristin Mullins, president and chief executive of the Ohio Grocers Association, said her first question about the Whole Foods acquisition was: What does the move mean for the number of traditional “brick-and-mortar” physical stores in Ohio?
“We are always concerned when there is some loss of brick-and-mortar stores out there,” Mullins said after just hearing of the news early Friday.
Madeline Hurley, a grocery analyst with IBIS World, an industry research company, said Amazon will likely revamp Whole Foods’ internet presence.
“It is difficult to say what Amazon’s online strategy will be for Whole Foods,” she said. “Whole Foods’ online grocery channel is operated by Instacart, which will likely not be the case for long if the acquisition is approved.”
Still, Hurley doesn’t see Amazon buying the chain in order to close stores.
“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.
“This will definitely make the market more competitive,” she added.
“Limited-assortment” grocers, such as Kettering’s Trader Joe’s — stores that typically sell private-label goods and less variety in general — are growing quickly now. This acquisition may pave the way for even more of those kinds of stores, Hurley said.
For traditional grocers, like Kroger, this purchase makes the market even more price-competitive, she added.
Whole Foods wove its way into the crowded and competitive Dayton grocers market in 2015, with its first Dayton-area store, in Washington Twp. at 1050 Miamisburg-Centerville Road.
“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,” John Mackey, Whole Foods Market co-founder and CEO, said in a shared release with Amazon.
Completion of Amazon’s purchase is subject to approval by Whole Foods’ shareholders, regulatory OKs and other closing conditions. But those involved expect the deal to close in the second half of the year.