Amazon has already made inroads into tackling the grocery market in the US and UK. Both Amazon Pantry and Amazon Fresh are services that park the Amazon tanks on the supermarkets’ lawns. In the UK specifically, Amazon and Morrisons signed a deal last year. And Amazon has said it would like to bag 2% of the UK grocery sales.
So news that Amazon has bought US supermarket chain Whole Foods for $13.4bn is interesting but perhaps not surprising. It reinforces the Amazon interest in the sector and also offers an insight into where they’re going. Firstly, don’t forget that Whole Foods is a pretty trendy and high-end outlet with an organic focus. The UK equivalent is certainly Waitrose, although that doesn’t really stack up to the contrast Whole Foods makes with, say, Walmart over there.
Whole Foods has 9 UK branches and nearly 350 in the US and Canada.
The deal further shows Amazon’s willingness to take on Bricks and Mortar (B&M) outlets. Walmart is very much taking on Amazon and utilising its network to develop ecommerce and click & collect at its thousands of stores. Whole Foods doesn’t have a similar footprint but it is popular in this more affluent areas that Amazon likes.
Whole Foods co-founder and CEO John Mackey says: “This partnership presents an opportunity to maximise value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.” He’s gonna stay put as head honcho and the firm will remain based in Austin, Texas.
Perhaps the most tantalising aspect of this purchase is whether Amazon might make a similar move here in the UK and snap up a chain of supermarkets to further cement its toe-hold in the grocery market. To put the Whole Foods purchase price into some kind of context: Sainsbury’s is currently valued at £5.5bn and has over 1400 UK stores.
