Amazon.com Inc.’s announcement Friday that it intends to buy Whole Foods Inc. in a $13.7 billion deal has upset more than a few grocery carts.
Stock prices and expectations have jumped up (and down) at the news. And grocery and food-trend observers wonder whether Amazon can do for fresh tomatoes what it did for Harry Potter novels and Beyonce CDs.
Here are a few things to know about the deal that the companies involved expect will close in the latter half of the year.
1. Analysts wonder whether, and how, Amazon can make it work.
No one seems to be counting the online retail behemoth out, certainly. But analysts are pointing out that delivering fresh produce to customers’ doors is different than delivering CDs and electronics.
One particular asset that may be of great help: Location. The carefully chosen locations of all those Whole Foods stores (including our own in Washington Twp.). The Wall Street Journal reports that Whole Foods has its 456 stores “concentrated in pricey ZIP codes.”
“Whole Foods already is close to a lot of customers with means,” the Journal noted.
2. Amazon has a big presence in Ohio.
Many in the Dayton area were disappointed when Amazon decided in January to build a global cargo hub at Cincinnati/Northern Kentucky International Airport, instead of at the Wilmington Air Park, where Amazon for a short time worked at what seemed to be the start of a hub operation.
But Amazon still has a solid connection to Ohio. The company has a distribution center in Licking County east of Columbus, with about 2,500 employees (with more closer to Christmas), and another center in Obetz, with a trio of data centers, to boot. There’s also a distribution facility in the Columbus area linked to “Amazon Prime Now” grocery deliveries.
3. A competitive — and pressured — grocery market will likely get more competitive.
It has been no secret that Dayton is blessed or crowded (depending on your point of view) with a slew of competitive groceries slugging it out in the market.
“There is nowhere hotter than the Dayton area right now when it comes to grocery-store development,” Nate Filler, then the president and chief executive of the Ohio Grocers Association, told Reporter Mark Fisher in 2015. “It’s a weird perfect storm, and I don’t know how long it’s going to last.”
We’ll see how it shakes out, but Amazon’s purchase of Whole Foods will only make that competition hotter.