For now, Whole Foods seems happy with the deal.
The picture is more complicated for Wal-Mart and Target.
When the dust finally settled on Amazon.com, Inc. Mackey nonetheless has some harsh words for Jana Partners, the activist investor that pressure him to shake up his company, referring to them in the Texas Monthly interview as "greedy bastards" who wanted to make money from a forced sale.
If Amazon wants to become the 'The Everything Store', then this acquisition is a masterstroke. Whole Foods stock closed at $33.06 a share Thursday, the day before the merger was announced. German discounters Aldi and Lidl are battling Wal-Mart, which controls 22% of the U.S. grocery market, with each vowing to undercut whatever price the others offer.
When Amazon bought the upscale grocery chain Whole Foods for $13.7 billion, it immediately set off speculation about the changing nature of shopping. This acquisition propels Amazon into the largest retail market for sure.
Technology is just one way Amazon stands to change Whole Foods and its culture, though.
In the USA "this adds 440 refrigerated warehouses within 10 miles of probably 80 percent of the population", said Michael Pachter, an analyst for Wedbush Securities.
Walmart is also expanding its online grocery business by offering curbside pickups for online orders and opening trial drive-up pickup kiosks. It also is testing same-day fresh and frozen home delivery from 10 of its stores. "I think we're gonna get a lot of those innovations in our stores".
What: With its purchase of Whole Foods for U.S. $13.7 billion, Amazon strengthens its position in the race for the retail industry, and opens the door to direct contact with the Hispanic community.
Culpepper, who owns Kroger Co shares, said Kroger is the company that would be most likely improve Whole Foods' efficiency, but that it would have difficulty matching Amazon's cash offer. Amazon could provide the financial capital and tactical ability to build that into something big. Jennifer Bartashus, an analyst at Bloomberg Intelligence, said that in addition to technology investments, Kroger has a strong base of customers across the US, including suburban areas outside of the big-city markets where Whole Foods is strongest. Woolworths (BigW) shed 3.5% - the biggest single drag on the index (but the ASX 200 jumped 31 points so Amazon had no impact whatsoever) - while Wesfarmers (Coles, Target and Kmart) lost just 0.2%.
And with Amazon's investor base clearly having been trained to give Bezos and his management team the benefit of the strategic doubt, expect investors to be willing to look past a continuation of discouraging sales trends at Whole Foods. Behind-the-scenes, Amazon uses in-store sensors, smartphones, data science, and its deep understanding of consumers to track purchases and charge your credit card.
Amazon is famously secretive about its business plans. While this deal certainly could be good for AMZN, we believe the market may be ignoring some of Whole Foods Market's off-balance sheet liabilities that make this acquisition more expensive than it appears.
"Ultimately, we see the deal allowing Amazon to take further share of its customer's wallet and see a large opportunity to leverage many of its technologies to grow and optimize the Whole Foods business".