Blog: Dean BestAmazon Whole Foods - industry reacts

Dean Best | 16 June 2017

Industry stakeholders broadly believe Amazon

Industry stakeholders broadly believe Amazon's move for Whole Foods will shake-up grocery

In one of those stories that shakes the sector, Amazon today (16 June) announced a move to buy US-based natural and organics retailer Whole Foods Market. Here's how a range of stakeholders have reacted to the US$13.7bn, all-cash deal.

"For other grocers, the deal is potentially terrifying. Although Amazon has been a looming threat to the grocery industry, the shadow it has cast has been pale and distant. Today that changed: Amazon has moved squarely onto the turf of traditional supermarkets and poses a much more significant threat. The only mitigation is that the more niche appeal of Whole Foods will, at least for the time being, limit the threat to other players" - Neil Saunders, the managing director of US retail consultants GlobalData Retail, says Amazon's move for Whole Foods could hit incumbents in the country's grocery retail sector.

"Alibaba is the precedent: Alibaba didn't buy one retailer, it has bought already four retailers for the same reasons. The same will be true for Amazon: it will need a lot more physical store estate to distribute efficiently, across the major cities" - Sanford Bernstein's senior European food retail analyst, Bruno Monteyne, suggests Amazon's M&A moves in grocery will not stop at Whole Foods.

"It clearly signals Amazon's intent to get serious about gaining share in the grocery business. This now gives them a four-pronged attack. Whole Foods as a physical point of distribution, Amazon subscription (Pantry) to drive centre-of-store, Amazon Prime Now for immediacy and Amazon Fresh for full home delivery. I think this instantly makes them a formidable force" - Neil Stern, senior partner at US retail consultants McMillanDoolittle, outlines how he believes the acquisition of Whole Foods will benefit Amazon.

"The proposed Amazon purchase of Whole Foods augurs well for the trend of healthier, nutritious, and good tasting fresh foods in the perimeter of the supermarket. The acquisition of Whole Foods increases Amazon's ability to efficiently deliver perishable foods within hours of purchase. Recent surveys indicate that up to 70% of consumers decide on their dinner meal after 12 pm. This will make the availability of high quality, perishable products -- such as those of MamaMancini's -- a key buying decision for consumers" - Carl Wolf, the chairman and CEO of fledging, listed US meatballs-to-meatloaf supplier MamaMancini's, is positive about the deal.

Twitter was abuzz with manufacturers, consultants, analysts and media commentators giving their views on the deal - and there were some more pragmatic voices amid the general surprise to the news and amid the claims the transaction would shake-up the market.

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Commentators noted the impact Amazon's announcement was having on the share prices of listed US retailers and food manufacturers:

Some commentators started to speculate where Amazon could look next:

"Within the UK we think Tesco will aim to be the Amazon-alternative long term, so the 2 candidates would be Morrisons or Sainsbury's. While Morrisons already has a deal, locations and the nature of private-label ranges means that Sainsbury's is better positioned to be acquired" - Sanford Bernstein's Monteyne.

Snap column from just-food: Amazon's move for Whole Foods will focus minds

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