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Grocers facing a united Amazon-Whole Foods must adapt

SeattlePI.com Monday, 19 June 2017
NEW YORK (AP) — Grocers trying to compete with the threat of a combined Amazon and Whole Foods will have to make their stores more appealing, leverage their locations to offer delivery and do a better job of collecting shopper data. Amazon's planned $13.7 billion acquisition of the organic and natural foods grocer signals a massive bet that people will opt more for the convenience of online orders and delivery or in-store pickup, putting even more pressure on the already competitive industry. Grocery shopping is likely to get more sensory, as retailers try to make stores a draw beyond just picking up staples. Other deals could follow the Amazon-Whole Foods announcement, with Credit Suisse analysts saying that mergers represent "the path to survival." JP Morgan analyst Ken Goldman noted that Sprouts Farmers Market, which is known for its low prices on natural and organic products, could become a more likely target for acquisition. The top 10 grocery retailers plus Amazon control less than half of the market, according to John Blackledge, an analyst at Cowen & Co. Several hundred grocery chains, convenience stores, dollars stores as well as mom and pop stores account for the rest. Whole Foods had been working to get better at data collection with the rollout of a loyalty program, and Amazon is expected to give those efforts a significant boost. Amazon is known for driving sales at the expense of profits, Stifel analyst Mark S. Astrachan noted, saying the company will likely maintain that approach as it looks to build market share in groceries. The technology giant has been testing a cashier-less convenience store in Seattle where sensors track the items that shoppers put in baskets.
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News video: Amazon buys Whole Foods for whopping $13.7 billion

Amazon buys Whole Foods for whopping $13.7 billion 00:57

Amazon has snagged Whole Foods for a whole lot of dough. $13.7 billion to be exact. Whole Foods CEO John Mackey is going to stay on and the brand will continue to operate under the same name. John Mackey The move further illustrates efforts made by Amazon Amazon would pay $42 a share, a 27 percent...

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