Amazon is reportedly planning to cut jobs at Whole Foods

Xavier Trudeau
Juin 19, 2017

"More broadly, as a well-established retailer focused on the lucrative health and wellness market within grocery, Whole Foods is perfectly positioned to give Amazon a crash course in how food retailing really works on the ground".

All three are exposed to Amazon's entry into Australia and the United States giant online retail just made a big move into bricks and mortar, buying grocery chain Wholefoods. If so, the logical buyer would be Walmart (NYSE: WMT), the company the Whole Foods deal is meant to challenge.

Goldman Sachs Group Inc advised Amazon on the deal and provided bridge financing.

Brown Political Review notes that the establishment of almost 500 automated grocery stores would do more than just get people talking, though; it could cause huge waves in the retail industry at large.

Wikimedia CommonsAmazon is planning to cut jobs at Whole Foods when it takes over the company, according to a Bloomberg report published on Sunday that cites a source with knowledge of the matter.

That could in turn spur mergers among large food manufacturers that feel compelled to negotiate with heftier clients.

Amazon would also look to change Whole Foods' inventory, introducing its own private-label products to replace items deemed too expensive to have mass appeal, the person with knowledge of the matter said.

One analyst from Barclay believes the bidding for Whole Foods (NASDAQ: WMF) may not be over.

Analysts generally praised the deal as a smart buy for Amazon, but not everybody was applauding.

He warned that Amazon already exerts risky influence "over America's markets for books and music, and is fast consolidating control over other key flows of information and ideas".

Ryne Misso of the research firm Market Track said a customer who buys fresh fruit regularly at Whole Foods might be offered a deal on blenders and serving bowls.

Amazon.com, Inc. (NASDAQ:AMZN) did something that caught many market analysts by surprise. AD's share was in freefall after the announcement, down 10 % after only an hour.

Nevertheless, the combination of Whole Foods' brand reputation, combined with the prowess and technology that has made Amazon an economic power on par with Walmart, will cause plenty of sleepless nights for executives within the largest US grocery companies. "But the success of Aldi does suggest that there's a reason Wal-Mart should be anxious". On the other hand, Amazon raked in Dollars 136 billion in revenue in 2016. Using a combination of computer communication and sensor technology, Amazon's app would be able to tell when the customer took any item off the shelf.

The deal raises the prospect of Amazon potentially acquiring an existing distribution network from one of the independent players in Australia's grocery market, says Gary Mortimer, a retail expert and associate professor at Queensland University of Technology.

That push also will reverberate through the broader industry. More significantly, it caused some $30 billion to disappear from Costco, Wal-Mart Stores, Kroger, Supervalu and other grocery vendors.

But home delivery of goods has proven to be a big hurdle due to costs and the difficulty of selling meats and other perishables.

"Amazon is known to drive down prices and make the shopping experience more efficient", Wu said.

Samir Bhavnani, VP of Consumer Insights, 1010data said,"While Walmart is augmenting its digital assets, Amazon is not standing by, investing in a significant way to expand its brick and mortar presence". Wal-Mart posted a 63% increase in online sales in the first quarter.

New competition from Amazon will "exert margin pressure on everybody else and force everybody to be innovative and consolidate", Agnese said.

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