Amazon’s Move to Purchase Whole Foods Is ‘Disruption of Society’
TheStreet's Action Alerts PLUS Portfolio Manager Jim Cramer said Amazon's move to acquire Whole Foods is a disruption of society, "this is what I regard to be a move by Amazon to destroy the margins and own the business of food and groceries in this country," Cramer said.
The Future of Retail Grocery in a Digital World
McKinsey’s Future of Retail Grocery in a Digital World highlights the major trends that define this new period of retail and looks at how traditional retailers need to evolve in order to thrive.
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Whole Foods' technology woes have now been solved thanks to Amazon's technology prowess.
"One of the things Whole Foods underspent on for a long time was point of sale," Jim Cramer said (watch video above).
"You don't have to worry about that anymore because Amazon is the king of point of sale."
"Amazon is a country and it's a country that offers everything you need to feed and clothe the family," Cramer noted.
"This is what I call the most ultimate disruption that I have seen in an industry."
Whole Foods Market ranked #28 and Amazon ranked #2 on Fortune’s 2017 list of World’s Most Admired Companies.
Jeff Bezos, Amazon founder and CEO, 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, they've been satisfying, delighting and nourishing customers for nearly four decades - they’re doing an amazing job and we want that to continue.”
“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,” said John Mackey, Whole Foods Market co-founder and CEO.
Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.— Dennis K. Berman (@dkberman) June 16, 2017
With Amazon putting down $13.7 billion to buy Whole Foods, Bezos is sending a powerful message to his retail rivals;
- Food suppliers will now be dealing with an even larger grocery store, meaning potentially pressured profit margins for organic players such as Hain Celestial.
- Amazon officially shows intent to enter bricks-and-mortar retail in a larger way than just bookstores. Combine that with its unmatched digital presence, Walmart, Target and others have been put on notice.
- Grocer stores like Kroger will now be in an even bigger price war.
- Amazon Prime integrated into Whole Foods could hurt Costco over time. Many Costco members are also Prime members.
As Fortune's John Kell wrote, the deal is a shot across the bow for Amazon's bitter rival Walmart, the top grocer in the U.S. and No. 1 on this year's Fortune 500. (Amazon is No. 12.). Note: Walmart today, agreed to acquire the men’s clothing company Bonobos for $310 million.
Whole Foods Market Locations in North America
A look at a map of Whole Foods locations in North America, shows that Amazon is acquiring a substantial footprint for fresh food - the kind of infrastructure that could accelerate its AmazonFresh grocery delivery service much in the same way that Amazon's network of fulfillment centers has accelerated its ability to sell, well, everything.