Amazon stumps up nearly $US14B for Whole Foods Market

The company is pursuing a huge acquisition that might make you think it is. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods.

Amazon is buying Whole Foods Market in a deal valued at $13.7 billion, uniting the on-line giant with the grocery store chain that touts fresh organic foods.

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.

Amazon "will be able to compete with large grocers through multiple channels", Hurley said.

The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's.

With the Whole Foods deal, Amazon Chief Executive Officer Jeff Bezos is acknowledging that, after a decade-long foray marked by scattershot experimentation, he couldn't go it alone in the $800 billion grocery business. Whole Foods already has a lot of in-store dining and lots of prepared foods.

They have indicated that they do not plan to automate cashier jobs in the stores, . When Amazon approached, Whole Foods turned again to Evercore.

Pachter said that even if Amazon gets 20 million members of its Prime loyalty program to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million not going to traditional supermarkets.

"It's pharmacy. It's having the ability to put stores that are similar to Apple stores inside Whole Foods", he said.

The message is this: The brick-and-mortar retail business that pioneered organic, fresh food and the country's dominant e-commerce company makea powerful combination. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions such as ModCloth and Moosejaw.

The Whole Foods purchase "doesn't necessarily mean Amazon will shift it into an online grocer", she said.

According to Reuters, the agreement also comes as a savior for Whole Foods, which has seen sales declines for past seven consecutive quarters.

But is Amazon turning into a monopoly? Amazon, which for years has been testing new technology and innovations in quiet corners, now would have a network of physical locations to test and implement those ideas.

In exchange for this strategic deviation, Amazon gets access to a slew of wealthy customers and information about their food-buying habits. The idea is to gravitate away from the "Whole Paycheck" perception for high prices that has dogged Whole Foods, the person said. The stores will evolve to become more experiential.

Indeed, shares of Cincinnati-based Kroger, which plummeted 19 percent Thursday after the company slashed its earnings guidance, continued tumbling on Friday. The investment firm Jana Partners said in April that it had built up an ownership stake in Whole Foods because it saw ways to address its "chronic underperformance for shareholders". That prodding irked Mackey, who has referred to Whole Foods as his "baby" and to Jana as "greedy bastards". Amazon invested in refrigerated distribution centers to hold items.

Wal-Mart, Target or others could respond with their own bids for Whole Foods, or for other food retailers such as Sprouts Farmers Market Inc., which is now "100 percent in play", according to Gordon Haskett analyst Chuck Grom.

Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general".