Monday, June 19, 2017

Alexa, Buy Whole Foods

Back in May, I shared a story from the Guardian that Whole Food's sales are declining and the company would be downsizing. The explanation was a combination of high prices (it's called Whole Paycheck for a reason) and increased availability of organic and specialty products at other grocery stores.

Friday, it was announced that Amazon would be buying Whole Foods:
Wall Street is betting Amazon (AMZN, Tech30) could be as disruptive to the $800 billion grocery industry as it has already proved to be for brick-and-mortar retail businesses.

Amazon already had a relatively small grocery business of its own, Amazon Fresh, but its acquisition of Whole Foods is much more ominous sign for competitors.

Traditional grocers are already struggling with fierce competition and falling prices. Amazon's war chest and online strength, coupled with Whole Foods' brand power, could force grocers to cut costs and spend heavily on e-commerce.

"For other grocers, the deal is potentially terrifying," Neil Saunders, managing director of GlobalData Retail, said in a report on Friday. "Amazon has moved squarely onto the turf of traditional supermarkets and poses a much more significant threat."
And of course, Twitter users had a lot to say about the deal:
Stock prices for other grocers fell Friday, totaling about $22 billion in market value. Obviously this isn't trivial, but after finishing Nassim Taleb's Fooled by Randomness recently, in which he specifically discusses randomness in the market, I'd be more interested in seeing what happens long-term (I'm expecting some regression to the mean soon).

And there's the big question - what will happen to Whole Foods? You can already buy groceries through Amazon, including more "mainstream" products you don't see in Whole Foods. Will Whole Foods become just another grocery store?
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