The acquisition is seen as a move by Amazon to more aggressively target the grocery section of retail has proven more stubbornly resistant to digital channels.
The transaction is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other customary closing conditions, but the parties expect to close the transaction in the second half of 2017, it added.
Whole Foods sent a letter to customers after the merger announcement, calling the agreement a new chapter in Whole Foods' history and an incredible opportunity. Whole Foods whose fleet of stores now numbers more than 430 locations has found it hard to attract more mainstream consumers as Walmart and other large chains have stepped up their sales of natural and organic products.
"This shows that online is going to be very dominant in the grocery business - and very quickly", said Errol Schweizer, a former Whole Foods executive.
Whole Foods, which will keep operating stores under its name, said in an email to customers, that it will maintain the same standards under Amazon, including bans on artificial flavors and colors and antibiotics in hens producing its eggs.
Amazon has been looking at shop layouts that could allow traditional in-store purchase, online ordering with on-site pickup, and home delivery, using store warehouse space as a distribution point, Ladd said. Currently, WFM operates approximately 460 grocery stores among the U.S., Canada and the United Kingdom, giving Amazon more operational points in major cities and suburbs.
The market reverberations of the announced deal traveled beyond the retail industry - shares of food companies like Hershey and Campbell Soup slid, too.
"We will continue to operate our stores and deliver the highest quality, delicious natural and organic products that you've come to love and trust from Whole Foods Market", Whole Foods told customers. Both companies said there will be no layoffs, but did not respond to other questions about Amazon's plans for Whole Foods.
A local expert says the $13.7 billion deal is strategic and will undoubtedly change the industry.
That said, there is some speculation that Amazon could end up changing its plans and ultimately use advanced technology inside Whole Foods stores.
"Amazon's brutal vision for retail is one where automation replaces good jobs". It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos. However, Whole Foods does not have access to Instacart's financial numbers and analytics.
Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs.
"Amazon is known to drive down prices and make the shopping experience more efficient", Wu said. Despite its likely new ownership equation-the deal hasn't yet closed-Instacart is doubling down on its anti-Amazon rhetoric.
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