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Amazon has made an ambitious move into physical retail with the $13.7 billion purchase of American organic supermarket chain Whole Foods. With this acquisition, Amazon are gaining a network of more than 430 physical stores, most of them located in urban locations of the US.
Amazon has grown over the past 25 years into the greatest operational success in the business world, controlling 43% of online retail sales in the United States alone. The supermarket and the grocery-store industry is valued at $675 billion per year according to the latest numbers from IBISWorld.
Amazon has been longing for a piece of the action and despite the launch of AmazonFresh over a decade ago, it is an industry that Jeff Bezos has found difficult to get into.
Jeffrey Bezos, founder and CEO of Amazon.com said “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.”
John Mackey, co-founder of Whole Foods, will stay on as CEO and the headquarters will remain in Austin, Texas.
Amazon has gained over $14 billion on its market capitalization following the announcement. Meanwhile, competitors like Wal-Mart, Kroger, and Supervalu went down 7%, 14.5%, and 17% respectively.
The deal is expected to close in the second half of 2017, pending shareholder and regulatory approvals.