Online retail giant Amazon has taken a decisive step into bricks-and-mortar retailing with the acquisition of high-end supermarket Whole Foods in a $13.7bn deal.
The deal hasn't come completely out of the blue. It was reported in April that Amazon had considered a swoop for Whole Foods last autumn. Amazon has also this week been linked with rumours of a deal to acquire collaboration upstart Slack in a $9bn acquisition.
However, the acquisition of Whole Foods unambiguously demonstrates Amazon's intention to drive into supermarket retailing and, perhaps, reflects an admission that requires bricks-and-mortar stores to fulfil its ambitions. It may also be planning use the stores in other aspects of its online business - for click-and-collect, for example.
The grocer will continue to operate stores under the Whole Foods Market brand, both companies said.
While Whole Foods is predominantly a North American retailer, it does have nine stores in the UK - seven in London, one in Cheltenham and one in Glasgow. Its expansion into the UK was halted several years ago in a bid to contain costs.
The acquisition will be watched with some interest and trepidation across supermarkets operating in the UK, but particular by Waitrose, with whom Whole Foods competes most closely, and Morrisons, which has a deal to supply food to Amazon customers in the UK.
Amazon's expansion into supermarket retailing might also present a particular challenge to online supermarket Ocado - which also has an online fulfilment deal with Morrisons.
The Whole Foods acquisition was masterminded by Amazon CEO Jeff Bezos. He indicated that Amazon would continue to run Whole Foods as a bricks-and-mortar supermarket chain. "Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades - they're doing an amazing job and we want that to continue," said Bezos.
Whole Foods co-founder and CEO John Mackey will continue at the helm for the time being.
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