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"Amazon.com Inc. said it would buy Whole Foods Market for $13.7 billion as the giant internet retailer makes a deeper push into the grocery space. Amazon will pay $42 a share for Whole Foods, valuing the grocer at a 27% premium to its closing price Thursday. The deal is expected to close in the second half of this year. In recent years, Amazon has expanded its online grocery business, AmazonFresh, after testing it in its hometown Seattle for years. Earlier this year, the company said it would launch a new grocery-store pickup service. While grocery accounts for a large component of consumer sales overall, online retailers have largely been unable to fully crack the code. They face hurdles like consumers wanting to pick their own produce and the need to deliver perishable, fresh and frozen food to people’s homes. Adding a network of grocery stores could help Amazon tackle those issues. Whole Foods has roughly 450 locations spread out across 42 states. The move could allow Amazon to reach customers closer to their homes and even sell more than just groceries. Amazon’s bookstores also sell its electronic products like book readers, tablets and media streaming devices. Amazon’s move tanked the stocks of grocery competitors as investors worried that Amazon could do to grocery the same as it did to booksellers...Amazon’s newfound foothold in brick-and-mortar grocery comes at a time when the grocery industry is already reeling from competition, with discounters like Aldi expanding in the U.S. and more customers shopping for groceries online...David Ciancio, a senior customer strategist for Dunnhumby and former Kroger executive, said “this is the most difficult time I’ve seen for the industry, and I’ve been in it 47 years.” Whole Foods has also faced some unique struggles as traditional grocers expand their natural and organic offerings that have been the mainstay of the company...John Mackey will remain as chief executive of Whole Foods and the store will continue to operate under its brand and maintain its suppliers."

Posted June 16th, 2017
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