Amazon said to plan cuts to shed Whole Foods's pricey image

After Whole Foods what next? Walgreens watch out- Amazon could be gunning for the healthcare market

He righted the Whole Foods ship by refocusing on brick-and-mortar retail and going on an expansion boom, which would boost the stock price five-fold at its peak. WFM's locations provide Amazon with a large retail presence, which it could use to offer online order and in-store pickup or use locations as mini-fulfillment centers for local delivery.

The move gives Amazon access to Whole Foods' 460 stores in the US, Canada, and Britain - most of which are well-located in desireable areas. Amazon brings a technology and distribution ability that no grocery retailer has. While Amazon has been experimenting with "grab and go" tech-enabled grocery stores for a while now, the huge acquisition of Whole Foods shows just how fast this concept could be a reality.

The merger is expected to be completed in the latter half of the current year after receipt of approval from Whole Foods Market's shareholders, regulatory approvals and meeting of certain customary conditions. However, with the acquisition of Whole Foods, Amazon has confirmed that it plans to be a serious player in this segment. Despite this report, an Amazon spokesperson directly told Bloomberg that it has no plans to use the sans checkout technology to cut cashiers.

After closing at $42.68 on Friday, Whole Foods shares were up 1.5 per cent at $43.32 on Monday morning after rising as high as $43.64 earlier in the session, suggesting hopes it would end up fetching a higher price.

Whole Foods was quick to point out, in a statement, that its stores will continue to operate under the Whole Foods Market brand, that its headquarters will remain in Austin, Texas, and that John Mackey will stay on as CEO.

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"Overall, this announcement simply serves to underline our bearish view of heavily-processed packaged food names in the US". There's only so much automation can do in the grocery business. At the margin, if this move makes the current U.S. branded food players more likely to sell out to Kraft-Heinz, or catalyzes a reduction in stock prices that makes Kraft-Heinz more willing to engage with them, then this could be a good signal for Kraft-Heinz's acquisition prospects overall. Amazon's move aims at the heart of the Bentonville, Arkansas-based retail giant's business - groceries, which account for 56 percent of Wal-Mart's $486 billion in revenue for the year ending January 31. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot program to deliver groceries to food-stamp recipients.

Like groceries (and perhaps even moreso), home improvement retailers sell a lot of items that aren't easy to cost-effectively ship to homes via UPS and FedEx.

Whole Foods is also known for paying their workers very well and this may not be the case under Amazon's rule.

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. "I believe Whole Foods will continue their mission of offering the better-for-you food categories", CEO and co-founder of Halen Brands, Jason Cohen, said. "We expect continued downward pressure on pricing from intense retail competition, driven by retailers like Walmart, Aldi and Lidl and online retailers, too".

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