Online retail giant Amazon is making a bold expansion into physical stores with a $13.7 billion deal to buy Whole Foods, setting the stage for radical retail experiments that could revolutionize how people buy groceries and everything else.
If this deal goes through, Amazon will - nearly overnight - become a major player in the brick and mortar retail industry.
"Dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks", O'Shea said.
Whole Foods, founded in 1978, saw its stock peak in 2013 at $65.24. All of these technologies can now be slowly integrated into Whole Foods stores to reduce headcount, increase profit margins and improve the chain's relationship with customers.
In Whole Foods, Amazon is acquiring a company that has recently come under pressure from investors for its lagging performance.
Just two years ago, Whole Foods CEO John Mackey predicted disaster for Amazon's foray into grocery delivery, telling Bloomberg BusinessWeek it would be "Amazon's Waterloo".
"The quality will give to provide a cheaper price to consumers", said Whole Foods Shopper Hamid Fhehollahi.
Yet in a week that included an interest rate hike by the Federal Reserve, an attack on congressional representatives in Washington, political uncertainty and a market-moving buyout of Whole Foods Market by Amazon, the broader market remained largely unmoved. "Whole Foods was losing market share to Kroger", said Brittain Ladd, who until earlier this year was a senior manager working to roll out AmazonFresh globally.
Jana had called for Whole Foods to overhaul its operations and brought in retail and food experts to help foster a turnaround.
Hetu said Amazon isn't likely to bring that to Whole Foods right away but could deploy pieces of it to further cut costs.
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"From the moment Jana had announced its stake in Whole Foods.an onslaught of attention from media and banks ensued", Whole Foods' chief executive, John Mackey, said in a Texas Monthly article this month.
Whole Foods may offer fewer jobs going forward if Amazon takes it over. It has persuaded grocers, including Whole Foods, to partner by warning them of the day Amazon would declare war on traditional grocery shopping.
Amazon also has been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.
The acquisition is still subject to approval by Whole Foods shareholders and federal regulatory agencies, with the negotiations expected to finish in the second half of 2017.
"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", Amazon Founder and CEO Jeff Bezos said in a statement. As many Prime subscribers know, once you can get pretty much anything you want delivered to your house for free in two days, going to the store just seems like a huge inconvenience.
Amazon has been looking at shop layouts that could allow the traditional in-store purchase, online ordering with an on-site pickup, and home delivery, using store warehouse space as a distribution point, Ladd said.
But Amazon now has the technology to prevent that type of behavior when customers enter any of its physical stores and log onto the WiFi networks there. It also manufactures and sells electronic devices, including kindle e-readers, fire tablets, fire TVs, and echo.
The grocery market, a $750 billion sector in the USA, is one of the few provinces in the retail world that Amazon hasn't managed to radically alter.
Excluding debt, the deal is valued at US$13.39 billion, based on 318.9 million diluted shares outstanding as of April 9.
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