Amazon announced Friday it’s purchasing Whole Foods for US$13.7 billion — the online retailer’s largest acquisition by far.
Speculation ran rife over what will happen to the organic grocery store chain, what the sale means for the growth of online grocery, the changes that might be in store for Whole Foods’ employees and the impact this will have on conventional grocery store chains as well as independent players.
Here’s a glimpse of what retail experts and analysts from around the globe have to say…
Andre Spicer, professor of organizational behaviour at Cass Business School, City University London @ CNN.com
“Amazon’s introduction into the grocery business is likely to ratchet up competition in the grocery sector. This might have some impact on already dominant players like Walmart, but it is likely to hit small players particularly hard, driving many smaller grocery firms out of business. This will inevitably also have an effect on the already dead or dying American main street.
The deal will also effect employees at Whole Foods. Currently, the company offers employees ample opportunities to “be themselves” at work. Amazon, in contrast, is famed for its high-pressure corporate culture, which requires unrelenting performance. It is likely Whole Foods employees will find their new ‘Amabot’ overlords difficult to swallow (Amabot is the nickname Amazon employees give themselves).”
Jeffrey Dorfman, a professor of economics at The University of Georgia @Forbes.com
“Imagine a world in which you could “purchase” all the canned goods, dry goods, paper products, and household products you need online and at Amazon’s low prices. Then you proceed to your local Whole Foods where those purchases are ready for pick up. You pick out your produce, meat, fish—all the things you want to see in person—at the store, then pay for everything at once and leave with a full set of groceries. This world combines the best of Whole Foods (high quality selection and goods that people like to peruse and buy only after seeing them) with the best of Amazon (low prices from its volume buying power).
It’s not exactly online grocery shopping as it has previously been envisioned, and there is no reason that the model I sketched above would have to be the only channel that Amazon-Whole Foods would construct. I am sure fully online shopping is part of the plan and that some shoppers will continue to experience Whole Foods strictly through the brick-and-mortar stores. However, the convenience of online ordering with in-store pick up combined with the ability to choose some items like produce, meat, and fish while in the store would be innovative and quite possibly the best use of both companies’ competitive advantages.”
Neil Saunders, managing director of GlobalData Retail @Retail-Week.com
“Though Amazon has been a looming threat to the grocery industry, the shadow it has cast has been pale and distant.
Today that changed: Amazon has moved squarely onto the turf of traditional supermarkets and poses a much more significant threat.
The only mitigation is that the more niche appeal of Whole Foods will, at least for the time being, limit the threat to other players.
However, at a time when grocers are facing margin compression from the expansion of discounters such as Lidl, the prospect of having to spend more on in-store technology and digital platforms to keep up with the Amazon behemoth is highly unattractive.”
Vivek Wadhwa, author and distinguished fellow at Carnegie Mellon University Engineering at Silicon Valley @MarketWatch.com
“I doubt that Google and Microsoft ever worried about the prospect that a book retailer, Amazon, would come to lead one of their highest-growth markets: cloud services. And I doubt that Apple ever feared that Amazon’s Alexa would eat Apple’s Siri for lunch.
For that matter, the taxi industry couldn’t have imagined that a Silicon Valley startup would be its greatest threat, and AT&T and Verizon, surely didn’t imagine that a social media company, Facebook could become a dominant player in mobile telecommunications.
But this is the new nature of disruption: disruptive competition comes out of nowhere. The incumbents aren’t ready for this and as a result, the vast majority of today’s leading companies will likely become what I call toast—in a decade or less.”