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TECHNOLOGY Saturday 17 June 2017

Amazon buying Whole Foods in bold move into brick and mortar

By ANICK JESDANUN Babson College in xxxxx. “I
AP Technology Writer think that this might be an
NEW YORK (AP) — Online opportunity for consumers
retail giant Amazon is mak- who have felt that Whole
ing a bold expansion into Foods is inaccessible.”
physical stores with a $13.7 Amazon will use technolo-
billion deal to buy Whole gy (automation and data)
Foods, setting the stage for to save Whole Foods, while
radical retail experiments Whole Foods will improve
that could revolutionize Amazon distribution -- not
how people buy groceries just for groceries but other
and everything else. stuff as well. For custom-
Amazon will be able to ers, this could mean better
use automation and data prices and delivery options.
analysis to draw more cus- “Dominant players like
tomers to stores while help- Walmart, Kroger, Costco,
ing Whole Foods cut costs and Target now have to
— and perhaps prices — look over their shoulders at
and better tailor its offer- the Amazon train coming
ings to customers. down the tracks,” O’Shea
Amazon, meanwhile, will said.
be able to use hundreds Online delivery of grocer-
of Whole Foods stores as BC-APFN-US--Amazon-Whole Foods,7th Ld-Writethru ies so far has been tough
distribution hubs — not just 06/16/2017 3:22PM - 1025 words for any company to pull
for delivering groceries but Eds: Adds graphic. With AP Photos off because of customers’
as pickup centers for what Foods has seen its sales around its grocery business. ees. The store uses sensors concerns about the qual-
customers order online. slump and in February said TECHNOLOGY TO THE RES- to track items as shoppers ity of meat and produce,
“The conventional grocery it no longer saw the poten- CUE put them into baskets or Wedbush Securities ana-
store should feel threat- tial for expanding its flag- Amazon could have built return them to the shelf. lyst Michael Pachter said.
ened and incapable of ship chain to 1,200 loca- up its groceries business The shopper’s Amazon ac- But if customers know that
responding,” Wedbush tions, up from about 460 in without acquisitions, but count gets automatically what they are getting is the
Securities analyst Michael the United States, Canada that would have been charged. same as what they’d get
Pachter said. and the United Kingdom. costly and time-consum- Hetu said Amazon isn’t at the local store, they are
Moody’s lead retail analyst It also had announced a ing, said Neil Saunders, likely to bring that to Whole more likely to try it out.
Charlie O’Shea said the board shake-up and cost- managing director of Glo- Foods right away but could Pachter said that even
deal could be “transforma- cutting plan amid pressure balData Retail. deploy pieces of it to fur- if Amazon gets 20 million
tive, not just for food retail, from activist investor Jana With Whole Foods, Amazon ther cut costs. Both com- members of its Prime loy-
but for retail in general.” Partners. gets an established busi- panies said there will be no alty program to pay $15
TOUGH TIMES FOR WHOLE Groceries are already a ness that it can transform layoffs, but did not respond a month extra for Ama-
FOODS fiercely competitive busi- through its technology and to other questions about zonFresh grocery-delivery
Amazon already offers ness, with low-cost rivals like supply network expertise. Amazon’s plans for Whole service, that’s 20 million
grocery-delivery services Aldi putting pressure on tra- And it should be able to Foods. not going to traditional
in five markets, but ana- ditional supermarket chains bring cost-cutting tech- Whole Foods has had a supermarkets. He added
lysts say expansion is tough and another discounter, nologies, such as robots to reputation of high prices that these are likely the
because its current distri- Lidl, opening its first U.S. move inventory around, and has been derided higher-income households
bution centers are set up stores just this week. Whole while the company gets a sometimes as “Whole Pay- who tend to buy more ex-
for dried goods, not perish- Foods itself had launched better picture of custom- check.” That could change pensive brands and cuts of
ables. Just two years ago, an offshoot chain named ers by marrying data from if Amazon not only cuts op- meat.
Whole Foods CEO John after its “365” private label Amazon and Whole Foods’ erational costs but passes And because customers
Mackey told Bloomberg brand in a nod to the pop- loyalty programs. those savings onto custom- can buy foods and bulk
BusinessWeek that Ama- ularity of no-frills chains. That, in turn, could help Am- ers. items like toilet paper from
zon’s foray into grocery de- The Amazon-Whole Foods azon do better with pricing “As Amazon has more re- a single retailer, discount
livery would be “Amazon’s combination could put and promotions, branding sources, they might be retailers such as Costco,
Waterloo.” even more pressure on and the overall store expe- able to streamline some ef- Target and Walmart should
But it was Whole Foods those chains and other big rience, said Robert Hetu, a ficiencies for Whole Foods, feel threatened, too.
that fell behind as shop- grocery sellers. Walmart, retail analyst at Gartner. allowing the retailer to of- Walmart has been trying to
pers found “good enough” which has the largest share Amazon also has been test- fer its organic and more address some of those on-
alternatives to the organic of the U.S. food market, ing automation technology sustainable products at line threats, pushing harder
and natural foods it helped has been working on low- at a Seattle convenience more affordable prices,” into online to build on its
popularize. ering prices, while Target store that’s currently open said Lauren Beitelspacher, strength in its stores and
Founded in 1978, Whole has been struggling to turn only to Amazon employ- a marketing professor at groceries. q