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

Posted at 6:10 PM, Jun 16, 2017
and last updated 2017-06-16 19:21:12-04

CINCINNATI -- Amazon announced Friday they would buy Whole Foods Markets; a move that sent Kroger shares tumbling.

A local expert says the $13.7 billion deal is strategic and will undoubtedly change the industry.

John Meyer, a portfolio and security analyst, said a “price war” between brick and mortar stores is already occurring.

While that’s good news for consumers, it could pose a challenge for Cincinnati-based Kroger as they try to attract new customers.

But Whole Foods customers are loyal, and some shoppers are excited about Amazon’s purchase.

“We love Amazon, and we love Whole Foods. It's probably like the perfect match right,” Whitney Winchester said.

Meyer said the biggest wrench Amazon has thrown into the grocery industry is how consumers will receive their products.

“Amazon didn't just buy a grocery retailer. I think what they bought was a distribution network,” Meyer said.

The company has experimented with fresh food delivery for years with Amazon Fresh. The Whole Foods purchase would let it expand to many more. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods.

It’s not yet clear how its drone delivery program or Prime one-day delivery could change Whole Foods.

While Whole Foods has struggled to expand, Amazon has been expanding its reach in goods, services, and entertainment.

It's also been testing automation technology at a Seattle convenience store that's currently open only to Amazon employees. The store uses sensors to track items as shoppers put them into baskets or return them to the shelf. The shopper's Amazon account gets automatically charged.

Drew Herdener, a spokesperson for Amazon, told The New York Timesthat Amazon has no plans to use this technology to replace the jobs of cashiers at Whole Foods, and no other jobs will be impacted as a result of the deal.

The Associated Press contributed to this report.