Days after Amazon announced a $13.7 billion agreement to acquire Whole Foods Market, the grocer's CEO, John Mackey, suggested it might spin off a new brand of stores that veers from the grocer's traditional operating model and core customers.
Some Wall Street analysts are starting to wonder whether another retailer will come up with a higher offer and start a bidding war for the Whole Foods grocery chain. And Whole Foods shares climbed 29 percent to $42.68 Friday - more than the $42 deal price - indicating investors expect another bidder may emerge. There has been plenty of speculation that if Amazon really wanted to make a presence in the grocery space, it would need to do something major in the brick-and-mortar space.
A Grubhub spokeswoman declined to comment on the note. Industry observers have said that Amazon may add a selection of discounted, non-organic food to distance the chain from its "Whole Paycheck" nickname.
In fact, Farhad Manjoo from the New York Times thinks that one big reason for Amazon to buy Whole Foods is to figure out how to sell groceries online in a seamless way, something no one else has mastered. Whole Foods recorded ~$16B in sales during 2016. "And I think it would be insane to change them", said Jeff Wilke, chief executive of world-wide consumer at Amazon, at the Whole Foods town hall.
Say "Whole Foods" and some envision a gastronomic nirvana, overflowing with a healthy bounty worth a premium price. The company spent over four years planning the cashier-less market and despite a few technical difficulties, an 1,800 square foot prototype is now open to Amazon employees in downtown Seattle. The company hasn't said whether that thinking changes under Amazon. More than 60 percent of Whole Foods shoppers are subscribers to Amazon Prime, and more than a quarter of Whole Foods customers already buy groceries on Amazon, according to the consumer research firm Magid. "I dreamed that we merged with Amazon", he said.
The line, according to the transcript, garnered laughter from employees in the room. "Additionally, over the past year, Whole Foods has also pushed their private label offering, especially with the roll out of their spin-off store 365 by Whole Foods".
Amazon agreed to pay $42 for each Whole Foods share under their agreement announced Friday. "That's a very important cultural value", he said. Amazon was on a huge growth curve prior to the acquisition, now it will leverage its distribution and data against the entire food industry, not just the healthy and organic categories.
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.