Amazon acquires Whole Foods Market for $13.7B

June 16, 2017  |  Sara Freund  |  Print Article  |  Email this Article

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Amazon will acquire Whole Foods Market for $13.7 billion during a period where grocery stores are changing rapidly, according to a statement from Amazon on Friday.

Whole Foods Market will continue to operate stores under the same brand and John Mackey will remain as CEO of Whole Foods and the headquarters for the company will stay in Austin, Texas.

On Thursday, Amazon announced it would offer Denver residents one-hour grocery delivery from Sprouts Farmers Market which includes organic produce, fresh meat and seafood, baked goods and natural vitamins. And now with the Whole Foods acquisition, its clear the tech giant is focusing on providing fresh and healthy delivery options.

The acquisition comes at a time when the landscape of grocery stores are changing quickly. In the past year growth in online grocery orders has increased to 6.8 percent, according to Nielsen.

Technology is beginning to play a huge role in the industry from delivery apps, like Instacart or PeaPod, to meal kit delivery systems, such as Blue Apron and Hello Fresh, and even scan-and-go apps that keep track of how much your spending as you shop, according to a report from JLL. Kroger’s ClickList lets customers order online and pick up in store and Whole Foods has experimented with iPad kiosks in “lab stores” to expedite the check out process for customers grabbing prepared food.

Overall grocery stores appear to be doing well, with Aldi and Whole Foods opening the most stores in 2016, according to JLL. Texas and California had the most new grocery store openings in 2016 with about 3 and 2 million square feet of new grocery space leased respectively. Midwestern states Ohio, Michigan and Illinois captured about 3 to 4 percent of the total new grocery space leased last year.

Crucial areas for grocers to succeed in are convenience, price and customer experience, reported JLL. However, the competition presented by Amazon and easy-to-use apps might be too big of a hurdle for some retail chains to climb.

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