There are deals, and then there are big deals. Amazon buying Austin-based grocery chain Whole Foods for $13.7 billion certainly falls into the latter category. But what makes this deal so big isn’t even the money – there have been bigger deals before – it’s the ripple effects on workers, wages, other companies and everyday people.
Since the deal was announced early Friday, some of its long-term effects are starting to become more clear.
“Amazon has had grocery ambitions for a long time,” says Bloomberg food reporter Craig Giammona. “They spent about a decade trying to crack the code on fresh food. This would give them a very premium brand that has a lot of credibility with customers, and puts them right in the middle of the grocery industry in one fell swoop.”
Giammona says there is some concern among “hard-core Whole Foods fans” that Amazon could change the grocery’s image and product options.
“Amazon competes head to head with Walmart, so that’s a very different world than organic food or quinoa and kale and the premium food that Whole Foods is known for,” he says.
But he also says the deal could be an opportunity for Amazon to fix some of the issues Whole Foods has faced, as well as an opportunity to attract new customers through lower priced products.
“Grocery has been pretty insulated from e-commerce to this point,” Giammona says. “There was a sense that that was changing, and now [Amazon] is right in the middle of the industry if this deal goes through.”
He says other grocers like Kroger, Costco and Walmart are in the process of figuring out what’s next and how they’ll respond to remain competitive.
He says it’s also too early to know what exactly Amazon will do with the more than 400 brick-and-mortar Whole Foods stores they’ll acquire.
“Are they going to put lockers in there where you can pick up electronics and clothes? It is really fascinating to think how the landscape could change if this deal goes through,” Giammona says.
Written by Molly Smith.