Amazon's purchase of Whole Foods 'bought a distribution network,' expert says

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Amazon.com said Friday that it would buy Whole Foods Market for $13.7 billion, its biggest acquisition ever and a huge move into the grocery business it's been trying to crack for a decade.

Now Amazon will take on grocers like Wal-Mart and Kroger.

"This will definitely make the market more competitive", she added.

Amazon has been eyeing stores that could allow traditional in-store purchases, online ordering with on-site pickup and home delivery, using the stores' warehouses as distribution points. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains.

"The conventional grocery store should feel threatened and incapable of responding", Wedbush Securities analyst Michael Pachter said.

Madeline Hurley, a grocery analyst with IBIS World, an industry research company, said Amazon will likely revamp Whole Foods' internet presence.

Flanagan, who had served as Whole Foods' CFO since 1988 when the chain had six stores, also departed last month, after announcing her retirement last November. The company, which has stores in the Fort Wayne area and operates Fred Meyer, Ralphs and Fry's, on Thursday reported its second straight quarter of declining sales at established locations after more than seven years of uninterrupted growth.

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Whole Foods had been under pressure from activist hedge fund Jana Partners LLC prior to the announcement of Friday's deal, prompting it to overhaul its board of directors.

Amazon, meanwhile, has been expanding its reach in goods, services, and entertainment.

Amazon is considering extending the cost-cutting effort with the no-checkout technology it's developing at its Seattle convenience store, "AmazonGo", according to the person familiar with the matter, who asked not to be named because the plans are private. You point out that 24 percent of millennials bought something from Whole Foods past year.

"Amazon's brutal vision for retail is one where automation replaces good jobs". Earlier this week rumors were swelling that Amazon had its sights on acquiring messaging technology company Slack, turns out it was Whole Foods that would be first. The store uses sensors to track items as shoppers put them into baskets or return them to the shelf. The stock is up more than 31% so far this year.

The AP reported that Campbell Soup, Hormel, General Mills and Sysco shares fell between 3.2 and 3.3 percent, while United Natural Foods shares dropped 8.6 percent.

"I think we will be a bell-weather for what will happen around the country", said Ed Fox, marketing professor at the Southern Methodist University Cox School of Business.

Apparently longtime CEO John Mackey will stay the CEO and the headquarters will stay in Austin. The deal is expected to close later this year.

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