Will Walmart Bid for Whole Foods?

Will Walmart Bid for Whole Foods?

In the UK, Amazon has been accused of treating warehouse staff like "cattle".Whole Foods, though, seem undeterred.

They argue the Whole Foods acquisition will give Amazon an unfair advantage over traditional grocers and new players that might emerge in the market, potentially grounds for the deal to be blocked for antitrust reasons. Its biggest online idea this year is Restock, a facsimile of Amazon's three-year-old Prime Pantry service, which delivers a box full of different household essentials for a flat fee.

Wal-Mart, the world's largest retailer, has been investing heavily in building its e-commerce business and has been acquiring smaller online companies such as Jet.com, ModCloth, Moosejaw and Bonobos. That report, which was first covered by The Seattle Times, found that "Members of both Costco and Prime have not and generally do not intend to spend more with one retailer/e-tailer at the expense of the other", according to the report, which noted brand loyalty being a boon to both.

Whole Foods is now owned by a company which did not exist 25 years ago, and which prioritizes growth and evolution over profit.

Shares in United States supermarket chains Kroger and Costco have plummeted since the deal was announced last week, while Amazon's have already enjoyed a 3% bump - adding roughly $13 billion to its market capitalisation, just short of the figure it will pay for Whole Foods.

Toro's firm developed the Avalon mixed-use community in Alpharetta, which includes a Whole Foods. There may not be a huge overlap between its own store network and that of Whole Foods, but every supermarket chain faces extinction with Bezos' omnichannel approach.

For Walmart, and many other rivals, the best scenario would be if regulators were to slow Amazon's expansion. "Wall Street's reaction is certainly telling that story".

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On the price front, Walmart, Target and Kroger were already feeling pressured.

Trader Joe's and specialty grocers such as Sprouts Farmers Market, Fresh Market, Earth Fare and, of course, Whole Foods, also have made aggressive pushes into the metro market.

This early lead, cemented by densely populated urban areas and cheap labor, could be key as retailers and tech firms race to boost margins on low-priced consumer goods by reinventing supply chains with big data analytics. The only way for such an expansion plan to work is if Amazon could structure a mid-market banner to appeal to a larger part of the market than Whole Foods' more upscale customer demographic. The current offer only comprises 6 percent of their market cap while 3 percent of Amazon's. Amazon's pivot toward the health and wellness space is one more signal that the business world is pursuing the commercial benefits of this area. But grocers have had little to fear from the rise of online retail. "Remember, Amazon is willing to lose money to win market share and kill off competitors". The month of May saw increases of more than 600 percent year on year.

According to a 2015 USDA survey, about nine out of 10 USA households use their vehicles to go grocery shopping, driving an average one-way distance of four miles to get to a preferred store.

For most of us to see Whole Foods being acquired is not shocking.

Like Walmart, Kroger has been competing aggressively in natural and organic foods, having recently made a giant leap with its phenomenally successful Simple Truth store brand.

"We're becoming a giant corporation in the USA", she said. You can not succeed with a "pure play" online model. Amazon has been in the grocery business for a while with its AmazonFresh business, but the venture hasn't been very successful. "Amazon is placing its bet on the future of the food industry", says Errol Schweizer, a former Whole Foods executive who is now an industry adviser, "and they see Whole Foods as the leadership". Khan wrote a paper titled "Amazon's Antitrust Paradox" that appeared this year in the Yale Law Journal. Restock is so far only available in Target's hometown of Minneapolis. Customers just pick up what they want and walk out with sensors detecting the items. In other words, WFM is an "experience" store, much like Amazon Go. Conversely, both Amazon and Whole Foods are close to saturation among the high-income households which represent just 26 percent of the US population.