dglobalnews.com Whole Foods CEO is head over heels in love with Amazon
Published: Thu, June 22, 2017
Research | By Kayla Price

Whole Foods CEO is head over heels in love with Amazon

The deal is going to "change how you buy food forever", in the words of USA Today.

Amazon announced on Friday that it was offering to pay $13.7 billion in cash for Whole Foods - a deal that values the chain of organic grocery stores at $42 a share. Amazon and Whole Foods have the combined power to engage in low cost pricing - something mom and pop shops certainly can't do.

"And she said, 'That's insane, '" John Mackey said at a town hall meeting on Friday, after Amazon announced it was buying Whole Foods for $13.7 billion. It was truly love at first sight ... "These are great people with big hearts and big ideals that wanna make the world a better place and are making the world a better place".

And so we will be joining a company that's visionary.

"We just had these big grins on our faces, like, "These guys are fantastic.' They're so smart. This is gonna be so incredibly wonderful".

The deal comes after Whole Foods has been pressured as a key sales figure has declined. "We're not changing our quality standards", he told his employees. "This would give them a very premium brand that has a lot of credibility with customers, and puts them right in the middle of the grocery industry in one fell swoop". And- these guys are really smart people. I think we coulda talked for 10 hours.

But other experts see advantages to buying Whole Foods beyond just its gourmet and organic food, and access to the affluent customers who favor it. But Mackey promised a big shift in focus.

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To that end, Amazon is encroaching on territory long dominated by the likes of UPS, FedEx and the U.S. Postal Service.

At the all-hands meeting, Mackey said that Amazon may launch other supermarket brands with lower standards and prices once the companies complete their merger. To remain competitive with Wal-Mart (WMT) and Kroger (KR), Amazon (AMZN) will have to slash Whole Food's (WFM) sky-high prices, leaving local business owners in the dust. "They're not playin" a bunch of BS games", Mackey said. "I dreamed that we merged with Amazon", he said.

What exactly might these innovations be?

Walmart is the nation's largest seller of groceries with category sales of $170 billion a year ago, and retail giant has found that the category is key to driving store visits and customer loyalty.

Amazon's purchase of Whole Foods ups the stakes in this battle of giant retailers by giving Amazon not just the physical spaces, but also the knowledge on how to run them. It's gonna be an unbelievable team for our team member base. Meanwhile, the grocer's outspoken CEO has already said too much.

"Even if they did compete. you'd have to look at the presence of (other grocery chains)", said Abbott, who argued that many Whole Foods stores are in close proximity to other grocery stores, which means antitrust enforcers might be satisfied there was adequate competition.

In many ways, this result makes sense.

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