Money Amazon deal could rattle Canadian grocery market

18:51  19 june  2017
18:51  19 june  2017 Source:   MSN

Amazon to buy Whole Foods for $13.7 billion

  Amazon to buy Whole Foods for $13.7 billion The online retailer is stepping into the physical retail world in a big, big way.The online retailer, which has spent the last few years toying around with experimental physical stores, said it has agreed to acquire Whole Foods Market for $13.7 billion, or $42 a share. The companies expect the deal to close in the second half of the year.

Amazon deal to buy Whole Foods poses threat to Canadian grocers , experts say.

Amazon deal to buy Whole Foods poses threat to Canadian grocers , experts say.

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Amazon deal to buy Whole Foods poses threat to Canadian grocers , experts say.

Articles. Amazon deal could rattle Canadian grocery market Aleksandra Sagan, The Canadian Press. TSX up, but Amazon deal hammers grocery stocks David Hodges, The Canadian Press.

Quotes in the article

Amazon.com Inc

AMZN

Analysis | Drone-delivered kale, and 5 more things we might see at an Amazon-owned Whole Foods

  Analysis | Drone-delivered kale, and 5 more things we might see at an Amazon-owned Whole Foods Expanding AmazonFresh isn't the only thing that could come out of this deal. Expect the grocery shopping experience to be transformed.But expanding AmazonFresh isn’t the only thing that could come out of this deal. Amazon’s purchase could drastically change the way we shop for groceries.

Articles. Amazon deal could rattle Canadian grocery market Aleksandra Sagan, The Canadian Press. TSX up, but Amazon deal hammers grocery stocks David Hodges, The Canadian Press.

The massive .7B deal has rattled the stock value of Amazon 's new competitors in the grocery There are currently 13 Whole Foods locations in Canada , and local grocers could start feeling even The deal reinforces the need for Canadian grocery chains to develop their e-commerce and home

997.57
+10.60
+1.07%
Whole Foods Market Inc

WFM

43.07
+0.37
+0.87%
George Weston Ltd

WNGRF

89.10
-0.90
-1.00%
S&P/TSX Composite

0000

15,276.75
+84.21
+0.55%

Amazon's purchase of Whole Foods gives the e-commerce giant a foothold in Canada's grocery industry and could pressure supermarket chains to step up their game in an already competitive environment, experts say.

The retail behemoth announced Friday an agreement to buy Whole Foods Market in a deal that values the company, which specializes in natural and organic foods, at US$13.7 billion.

The move weighed on Canadian grocery retailers as shares of Loblaw (TSX:L), Empire (TSX:EMP.A), Metro (TSX:MRU) and George Weston (TSX:WN) all lost ground.

"It gives them a first step in Canada," said Michael von Massow, an associate professor at the University of Guelph, adding Amazon has shown it's committed to entering the food business.

What This Whole Foods Acquisition Means for Wal-Mart and the Rest of the Industry

  What This Whole Foods Acquisition Means for Wal-Mart and the Rest of the Industry What This Whole Foods Acquisition Means for Wal-Mart and the Rest of the Industry

This May 3, 2017, photo, shows a Whole Foods Market grocery store, in Upper Saint Clair, Pa. Experts say Amazon 's blockbuster deal to buy the Whole Foods supermarket chain poses a threat to Canada 's grocers and could force them to lower prices, enhance technology or boost their

The deal reinforces the need for Canadian grocery chains to develop their e-commerce and The retail behemoth announced Friday an agreement to buy Whole Foods Market in a deal that values Amazon could expand that technology or enhance its online grocery business with the Whole Foods

The online retailer launched a grocery delivery and pickup service, AmazonFresh, in the U.S. about a decade ago and started selling non-perishable food items to Canadians in 2013.

Last year, it opened Amazon Go, a checkout-free grocery store in Seattle, where customers are charged on their Amazon accounts for the products they leave the store with without ever having to see a cashier or self-checkout system.

Amazon could expand that technology or enhance its online grocery business with the Whole Foods assets, said von Massow, who works in the university's food, agriculture and resource economics department.

The deal reinforces the need for Canadian grocery chains to develop their e-commerce and home delivery solutions, wrote Irene Nattel, an RBC Dominion Securities Inc. analyst, in a note.

Canadians have few options for grocery delivery with a small number of companies like Grocery Gateway and a few large chains offering the service in limited locations.

Adding to the potential threat, Amazon is known for offering discounts and it's likely to encourage more aggressive pricing at Whole Foods, Michelle Grant, head of retailing at market research firm Euromonitor International, said in a statement.

  Amazon deal could rattle Canadian grocery market © Provided by thecanadianpress.com

Amazon will also likely offer cheap grocery delivery options, she said, which would put pressure on grocers to follow suit.

Whole Foods has 13 Canadian locations, which are mostly in the Greater Toronto Area and B.C.'s Lower Mainland. It has more than 400 stores in south of the border.

In the short-term, said von Massow, it's unlikely Amazon will steal customers from other Canadian grocers.

But Amazon's not going away and that will incite change, he said.

"What I think we will see — for sure — is some sort of innovation in the industry in response to a new competitor who's committed to coming in."

Follow @AleksSagan on Twitter.

TSX up, but Amazon deal hammers grocery stocks .
Energy stocks helped shore up the Toronto stock index, though shares in Canadian grocery retailers dropped sharply in the wake of Amazon's deal to buy Whole Foods Market. AMZN

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