On the other hand, while all this was happening, Walmart also announced on Friday its purchase of online fashion store Bonobos for $310 million. So far there's only one Amazon Go, open to the company's employees near its Seattle headquarters. Rivals such as Wal-Mart, Costco, Kroger and Amazon have been denting Whole Foods' sales by offering lower cost options.
But it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978.
If you live in the Pacific Northwest, there's no doubt the feed on your Facebook account was filled with news of Amazon's purchase of Whole Foods. "Amazon isn't thinking how can it charge Prime members more money, Amazon is thinking how it can capture grocery spending while also increasing its margins". Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains.
Reuters reported that Amazon's purchase of Whole Foods also brings disruption to the $700 billion United States grocery sector, which is a traditional area of retailing that stands on the precipice of a ferocious price war.
Amazon, which started life as an online book store in the 1990s, has already been making tentative moves into bricks-and-mortar bookshop and food sites in the US.
"Consumers are increasingly demanding products and services in near real time or "on-demand", and a physical presence in major cities gives Amazon an infrastructure to support consumers in near real time".
Whole Foods will eventually be part of Amazon CEO Jeff Bezos's empire. But a few other things might change eventually, as Amazon seeks to change its new spouse's reputation for pricey products. It might not be hard for Wal-Mart - or Target - to match the quality and price of products offered, but Amazon has an advantage in the form of its loyal Prime customer base and its AmazonFresh and Amazon Go offerings. According to insiders, about 10% of Instacart's business now comes from Whole Foods orders, but that seems likely to change.
"Taking a step back in the sector at large, we continue to believe investors will have more defense vs. AMZN's domination if they follow our Super Stock theory - we think deep value companies or luxury goods companies are more Un-Amazon-Able and less vulnerable to share losses vs. Amazon". The deal now gives Amazon control of those 431 stores, almost all of which are in neighborhoods that are more affluent and younger than America as a whole.
Meanwhile, Whole Foods has a partnership with Instacart, a company that uses "shoppers" who pick up items in stores for customers who have ordered groceries online. They're called Amazon Go stores.
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