Online retailer Amazon has added 460 stores in one fell swoop. On Friday, it bought luxury supermarket chain Whole Foods for $13.7 billion. With the acquisition, Amazon seems to want to boost its grocery delivery service Amazon Fresh.
Whole Foods targets the affluent, healthy American. The supermarket chain sells organic and vegan products. The company has 87,000 employees and posted sales of 14 billion last year.
This is Amazon's biggest ever purchase. The etailer is expanding its empire substantially. "With the purchase of hundreds of stores, Amazon is in one flap just a few miles away from some 80 per cent of US consumers," an analyst told the LaTimes. The retailer, which has long struggled with Amazon Fresh logistics, could use these branches as distribution points for its grocery service. Indeed, the branches are equipped with warehouse space, loading docks experience logistics staff. "This acquisition could well mark a turning point for the industry. Amazon will gain access to a buying network with deep knowledge of fresh," Paul Beswick of organisational consultancy Oliver Wyman told the Financial Times business newspaper. It will then become a lot easier for Amazon to get groceries chilled to consumers. Moreover, it can use the shops as pick-up points.
The acquisition is therefore bad news for US retail chains such as Target and Walmart, which know how to strategically use their physical proximity to consumers. This was immediately reflected in the stock market on Friday. Shares of several supermarket chains thundered down hard. At Ahold Delhaize, which gets 60 per cent of its sales from the United States, the share price was 7 per cent in the red on Friday.
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