Amazon Announces Plan To Buy Whole Foods For $13.7 Billion
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Amazon said today it's buying the supermarket Whole Foods in a deal valued at nearly $14 billion. This is by far the largest acquisition Amazon has ever made. It also means big changes are ahead for the grocery business. NPR's Alina Selyukh reports.
ALINA SELYUKH, BYLINE: It's lunch hour, and people are dipping in and out of a Whole Foods store in Washington, D.C. This particular shop has only been open for three months, but the chain's brand has had almost 40 years to grow.
CHRISTY DAVIS: Nice atmosphere when you're shopping.
CHRIS DORSEY: Higher-end foods, locally sourced, organic, vegetarian, vegan-friendly.
PAGE BUCHANAN: Even if it's, like, store brand, I feel like it's going to be good.
SELYUKH: That's Christy Davis, Chris Dorsey and Page Buchanan. What these customers may not realize is that the past few years have been rough for the upscale grocery chain. Activist investors bought a significant stake in the Austin-based company. They demanded changes. Founder and CEO John Mackey told Texas Monthly that they were greedy bastards. The store was his baby, and they'd have to, quote, "knock daddy out to take it over." Mackey will stay on as CEO under Amazon. Here he is in an interview earlier this month with NPR's Allison Aubrey.
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JOHN MACKEY: We do have shareholder activists that are trying to put pressure on management. They primarily want us to sell the company. But that's their real objective here so they can make a short-term profit. They're mostly about their own short-term financial interests.
SELYUKH: And then along came Amazon. The online giant has made no secret of its plans to be a physical retail giant, too, and it's already started doing grocery deliveries.
RICH TARRANT: Consumer purchases in a grocery space is, you know, $600-billion industry that has yet to be massively disrupted by online.
SELYUKH: Rich Tarrant is the CEO of MyWebGrocer, a company that helps grocery stores sell products online. He's got professional respect for Amazon for how efficiently and successfully it runs its business. He says having this powerful partner will put Whole Foods far ahead of its competitors.
TARRANT: As an industry, I mean they're 10 years behind at least. Every retailer in the market that competes with Whole Foods is going to have to offer their customers similar experience not just in product selection but in availability and timeliness.
SELYUKH: For Amazon, the deal gives it a physical presence in hundreds of locations but also places Amazon smack in the middle of a massive consumer goods market - the stuff people buy over and over again for their entire lives. Stocks of supermarket chains fell in the news of the Amazon-Whole Foods deal, and Tarrant says the pressure on the competitors will get more intense with time.
TARRANT: As Amazon get this ramped up and pushed out, I think we'll see a lot of brick-and-mortar supermarkets closing doors in the next four to five years not unlike we're seeing in traditional retail.
SELYUKH: Outside the Whole Foods in Northeast Washington, the shoppers were broadly pleased with the news - two trusted brands coming together, presumably planning to offer something high-quality and convenient - but then a big-picture step back from Sam Bernstein.
SAM BERNSTEIN: I don't know. I wonder how many companies are going to be in America in, like, 50 years, whether it's just going to be, like, 10 huge companies.
SELYUKH: Bernstein is actually a huge fan of both Whole Foods and Amazon. He says he's excited to try out whatever they offer. But he says he was going to ask a Whole Foods cashier about the Amazon deal and then hesitated, unsure whether the workers were as excited. Alina Selyukh, NPR News, Washington.
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