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·         Amazon And The Art of (The Grocery) War

·         Amazon Buying Whole Foods Will Stoke A Price War In The U.S. Grocery Business

·         Amazon plans cuts to shed Whole Foods's pricey image

·         Amazon just dealt a blow to Blue Apron's IPO plans

 

·         Amazon: Whole Foods Plan Hints at Price Cuts, Automation

·         Amazon Buying Whole Foods May Create A Whole New Way To Buy Groceries

·         Amazon is buying more than Whole Foods — it's getting 460 stores it can turn into warehouses and showrooms

 

·         3 Winners in the Amazon-Whole Foods Deal

·         Jana Partners Hits Home Run With Amazon-Whole Foods Deal

·         Amazon-Whole Foods: Price Likely to Climb

 

·         Target - Amazon-Whole Foods Tie-Up Should Be A Drastic Wake-Up Call

·         Jeff Bezos is $5 billion away from being the world's richest person

·         Amazon leading tech’s takeover of America

·         Amazon Makes Whole Foods Mecca For Millennials

·         DJ: For Amazon, Now Comes the Hard Part

 

 

Amazon And The Art of (The Grocery) War

 

By Karen Webster, PYMNTS

June 19, 2017

 

Let me tell you a story about the art of the grocery store war, one that Amazon and supermarket Whole Foods just took to the next level.

 

Chinese general and military strategist, Sun Tzu, was all about winning when the competition was fierce and the stakes were very high and he wrote a book to prove it. His thirteen-chapter book written  in the 5th century B.C. – The Art of War  – lays out his very strategic approach for how to do  that. This 2,500-year old best seller was first translated into English in 1910 and has influenced the actions of military leaders, business executives, political figures, trial lawyers and sports team coaches in modern times.

 

Tzu’s core principle for winning at war may at first sound counterintuitive – it’s  to avoid big battles. Instead, he believed,  attacks on the enemy should be  so carefully and strategically planned that one strike should be capable of  destabilizing them – you win and they lose because they’re incapable of fighting back. Doing that successfully, he wrote, requires a discipline of thought and a precision of execution: understanding the enemy and their vulnerabilities, having clarity about the outcome long before an attack is made, honing and keeping good sources of intelligence, having all of the troops united and aligned, and staging short, but decisive attacks.

 

And the element of surprise.

 

“In conflict, direct confrontation will lead to engagement, and surprise will lead to victory,” Tzu wrote. The element of surprise not only catches the enemy off guard (obviously) but those who are capable of carrying out such a well-executed surprise attack, Tzu believed, are also much more capable to seize the opportunities created as the enemy retrenches amidst the chaos.

 

The announcement of Amazon’s intention to acquire Whole Foods for $13.7 billion on Friday, June 16, 2017, clearly took the idea of using the element of surprise to a new level in grocery retail.

 

A surprise because Amazon has never acquired anything that costs more than $1 billion.

 

A surprise because Amazon has always used digital tools and technologies to crush existing brick-and-mortar retail and shift those sales to digital channels.

 

A surprise because no one ever expected Amazon to buy a beleaguered 431-store brick-and-mortar grocery store chain whose sales per square foot were second only to Costco in 2015, but with a business model that’s now under attack from competitors who’ve taken a bite out of their once strong but very pricey organic food foothold.

 

A surprise, because it’s much more about changing how consumers spend the roughly 12 percent of their household budgets allocated today to groceries and food – food eaten in the home and food eaten in restaurants – than going head to head with grocery stores.

 

And Amazon is doing it at precisely the moment in time where consumers are shifting that food spend and adjusting those grocery food shopping and eating preferences.

 

The acquisition of supermarket Whole Foods did what Tzu said the element of surprise always does: destabilizes the competition as rival grocery stocks tanked. It also gives Amazon the opening it needs to leverage the assets they’ve assembled to reshape how and how much consumers spend on food,  while the rest of the grocery sector is back on its heels figuring out what to do next.

 

And while the restaurant segment may not yet know what’s about to hit them.

 

Or mobile wallets, either.

 

Amazon’s Walk On The Wild Grocery Side ...

 

To Eat At Home – Or Not To Eat At Home?  That Is The Question ...

 

From “Whole Paycheck” To “Whole Food” Spend ...

 

more, including links, chart 

http://www.pymnts.com/amazon/2017/amazon-and-whole-foods-change-the-future-of-grocery-shopping-and-supermarket-spending/

 

 

Amazon Buying Whole Foods Will Stoke A Price War In The U.S. Grocery Business

 

Walter Loeb, Forbes

June 16, 2017  

 

In a surprise move, Amazon is buying Whole Foods for $13.7 billion, the companies revealed Friday. The $42 a share offer is a 27% premium over the Thursday night closing price for Whole Foods stock and represents a bold action by Jeff Bezos, chairman and CEO of Amazon. He will gain a dominant role in the grocery business.

 

Whole Foods has been hurt recently by the proliferation of organic food in other grocery stores. This has been Whole Foods' specialty since the company opened its doors in 1978. Currently the company operates 440 stores in the United States, 12 in Canada and 7 in Great Britain. Some Whole Foods stores were recently converted to 365 stores as management tried to revitalize the business by offering organic food at somewhat lower prices.

 

While John Mackey, CEO of Whole Foods, will remain in charge and the company will stay headquartered in Austin, Texas, I think that Amazon will automate the whole operation, integrate it into its websites and lower prices.

 

This action by Amazon comes at a time when greater price pressure is coming to bear on the grocery sector, with the German discount chain Lidl opening their first 10 U.S. stores Thursday in Virginia, North Carolina and South Carolina. A total of 20 stores will open this summer. Lidl has announced that it will open 100 stores by mid-year 2018. In Lidl's opening brochures feature very low prices. Here are some examples (per pound): 89 cents for tomatoes on the vine; 10 for $5 Greek yogurt; $2.99 pizza; $2.49 watermelon; $1.29 chicken breasts; 89 cent yellow peaches; $3.49 black angus beef patties; $2.49 pork tenderloin. General merchandise: $5.99 T-shirts, $6.99 BBQ tool set, $19.99 stainless steel toaster etc.

 

Lidl's German rival Aldi, which operates more than 1,600 stores in the U.S., is countering with a rapid expansion. By 2022 it aims to have 2,500 stores in the U.S. selling quality merchandise at very low prices similarly to Lidl’s offerings. As I've written before, Aldi and Lidl's entry into Great Britain seriously affected the profitability of Tesco, Morrison and Sainsbury markets as well as ASDA subsidiary Walmart.

 

I think there will be price wars as domestic grocery chains and grocery divisions of Walmart, Target, Costco and Sam’s, Kroger, HEB, Stop & Shop and many others chains who want to defend their turf. Amazon will increase the technological sophistication of Whole Foods and make at-home shopping more interesting at very low prices...

 

more

https://www.forbes.com/sites/walterloeb/2017/06/16/why-amazon-is-buying-whole-foods-i-see-price-wars/

 

 

Amazon plans cuts to shed Whole Foods's pricey image

 

Bloomberg

via PennLive.com - June 19, 2017

 

When Amazon.com completes its acquisition of Whole Foods Market, Chief Executive Officer Jeff Bezos will try to keep the grocer's reputation for premium fresh foods while cutting prices to shed its "Whole Paycheck" image, a source said.

 

Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with Wal-Mart Stores and other big-box retailers, according to a person with knowledge of the company's grocery plans. That included potentially using technology to eliminate cashiers. An Amazon spokesman denied any job cuts were planned.

 

Amazon, known for its competitive prices, is trying to attract more low- and middle-income shoppers with its grocery push. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot program to deliver groceries to food-stamp recipients.

 

Whole Foods has already been reducing prices to try to turn around its worst sales slump since going public in 1992. It has four "365 by Whole Foods Market" stores that are cheaper to build and operate than a traditional location and offer lower-priced items aimed at younger shoppers.

 

Amazon is considering extending the cost-cutting effort with the no-checkout technology it's developing at its Seattle convenience store, "AmazonGo," according to the person familiar with the matter, who asked not to be named because the plans are private. The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk, which would help Amazon differentiate itself in the brick-and-mortar setting and reduce labor costs at Whole Foods stores. The employees remaining would help improve the shopping experience, the person said.

 

Drew Herdener, an Amazon spokesman, said in a statement the company has "no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned."

 

Amazon would also look to change Whole Foods' inventory...

 

more

http://www.pennlive.com/nation-world/2017/06/amazon_plans_cuts_to_shed_whol.html

 

 

Amazon just dealt a blow to Blue Apron's IPO plans

 

    Blue Apron has posted steeper net losses each year since 2014, according to regulatory filings.

    Sixty-seven percent of sales were in fresh foods, Whole Foods said in May.

    Food delivery is already a fiercely competitive and fraught space.

 

Anita Balakrishnan, CNBC

16 Jun 2017

 

Amazon announced an agreement to buy Whole Foods on Friday, a blockbuster deal that sank stocks across the grocery industry.

 

The acquisition comes just two weeks after meal-kit delivery start-up Blue Apron filed for a $100 million IPO.

 

New York-based Blue Apron — valued at about $2 billion in the private market, according to CBInsights — would be a highly anticipated unicorn IPO. But the company already faced serious challenges, even before Amazon's Whole Foods takeover.

 

For starters, Blue Apron has posted steeper net losses each year since 2014, according to regulatory filings. An expose by BuzzFeed News last fall highlighted extreme stress in Blue Apron's packing facilities, where logistics were reportedly a struggle.

 

"I would get sent to Whole Foods and buy things if we really needed an ingredient and we didn't have it in the building," a former team lead told BuzzFeed. ("We are proud of our corporate culture and the good work that our employees do every day, bringing families across the country together over delicious, home-cooked meals," the company told BuzzFeed at that time.)

 

Indeed, filings show that one of Blue Apron's distinguishing features is the delivery of farm-fresh items — an area where Whole Foods also excels. Sixty-seven percent of sales were in fresh foods, Whole Foods said in May.

 

Two years ago, Blue Apron raised $135 million in funding...

 

more, including links

http://www.cnbc.com/2017/06/16/amazon-whole-foods-deal-could-shake-blue-aprons-ipo-plans.html

 

 

Amazon: Whole Foods Plan Hints at Price Cuts, Automation

 

David Z. Morris, Fortune

Jun 18, 2017

 

When Amazon completes its acquisition of the grocery chain Whole Foods, announced on Friday, the e-commerce giant plans to cut prices at the premium grocer while maintaining its reputation for high-quality boutique foods. The push for lower prices could be fueled by automation, staff reductions, and inventory changes.

 

The plans were first reported by Bloomberg and attributed to a source familiar with them. According to that person, Amazon also plans to add automated checkout systems at Whole Foods, which may include the technology under evaluation at the AmazonGo convenience store in Seattle.

 

That would mean fewer workers running checkout lanes. An Amazon representative quoted in the report denied that any layoffs or automation initiatives were planned for Whole Foods.

 

How will Amazon reduce Whole Foods' legendary "Whole Paycheck" reputation? Its plans could also include inventory changes that would eliminate the most expensive items from shelves and introduce more private-label goods.

 

Whole Foods' reputation has become a major pain point for the grocer, which has steadily lost sales to lower-priced competition—including Amazon. In February, after six straight quarters of falling sales, Whole Foods closed nine stores. It has already been lowering prices and experimenting with a lower-priced store format with fewer employees, 365 by Whole Foods.

 

True or not, the rumor of job cuts and automation points to a potential sticking point in the pending acquisition. Whole Foods has been recognized as one of Fortune’s 100 Best Companies to Work For every year since the list was created in 1998. It's described by employees as a workplace offering fair pay and a welcoming environment.

 

Amazon, on the other hand...

 

more, including links 

https://fortune.com/2017/06/18/amazon-whole-foods-prices/

 

 

Amazon Buying Whole Foods May Create A Whole New Way To Buy Groceries

 

Jeffrey Dorfman, Forbes

June 18, 2017

 

The retail sector in general, and food retailing in particular, experienced an earthquake-sized shock on June 16 when Amazon announced it was buying Whole Foods for $13.7 billion. While Amazon has been signaling serious commitment to online food retailing, the past is littered with companies that cumulatively spent billions in venture capital on various online grocery businesses. Eventually, they all stumbled on either the delivery problem (people need or want to be home when the groceries arrive if anything perishable is included) or the touch problem (people want to pick out the bananas, apples, and fish that look best to them). If these problems can be solved, the combination of Amazon and Whole Foods is probably the last and best chance for anyone to succeed in the online grocery retail space.

 

Amazon has the deep pockets to survive in the online grocery business for a while and patient enough stockholders that it has no real pressure to turn a profit in that segment anytime soon. Amazon also knows as much about delivery as anybody else and already has the infrastructure so that its cost of delivery is assumedly lower than any competitor could achieve. Because it can spread its fixed costs over all its other businesses, it just isn’t possible for anybody else to beat Amazon on the ordering and delivery costs if it chooses to use its Whole Foods purchase as leverage to make a really big move in online groceries.

 

The touch problem is harder, but again Amazon has a lot of experience in this area. They may not have a solution, but assumedly they know a lot about what it takes for customers to buy products they couldn’t touch first and which sort of products are most amenable to e-commerce.

 

Most intriguing is the prospect that Amazon does not use the purchase of Whole Foods simply as a knowledge source to grow its online grocery business, but instead gets more innovative. Others have already suggested that Amazon could use Whole Food stores as pick up points for online purchases completely unrelated to groceries...

 

more

https://www.forbes.com/sites/jeffreydorfman/2017/06/18/amazon-buying-whole-foods-may-create-a-whole-new-way-to-buy-groceries/

 

 

Amazon is buying more than Whole Foods — it's getting 460 stores it can turn into warehouses and showrooms

 

David Pierson and Makeda Easter, Los Angeles Times

June 16, 2017

 

Amazon can ship books, furniture and clothing across the Pacific Ocean in what feels like a blink of an eye. But when it comes to delivering fresh groceries to your doorstep, the e-commerce giant’s logistical prowess wilts like a bag of salad left out in the sun.

 

That’s because the long journey of, say, an avocado from Mexico gets progressively harder the closer it gets to the final consumer. It’s more costly and time consuming to deliver individual pieces of fruit to many customers. The hurdle, which has long vexed online retailers and is one of the chief reasons the grocery business is notorious for its low profit margins, is known in the logistics industry as the “last mile.”

 

By acquiring Whole Foods, Amazon is buying not just an established, upscale supermarket brand, but also a vast distribution network of warehouses and more than 460 stores worldwide — replete with back rooms and cold storage — in some of the most affluent ZIP codes in America. That’s a significant boost in numbers for the Seattle company, which currently operates fewer than 100 distribution centers in the U.S., a handful of them in the Inland Empire.

 

More hubs means quicker and fresher delivery, which will bolster Amazon’s existing grocery delivery service, AmazonFresh. The service, which is offered to the company’s subscription Prime members for a monthly fee of $14.99, is available only in about 20 U.S. cities. While the bid for Whole Foods may not bridge Amazon’s “last mile,” it certainly brings it closer, experts say.

 

In the U.S. “this adds 440 refrigerated warehouses within 10 miles of probably 80% of the population,” said Michael Pachter, an analyst for Wedbush Securities. “More importantly, it puts refrigerated distribution within 10 miles of probably 95% of Prime members. That means we can rely upon Whole Foods’ consistently high quality meat and produce, and can rely upon prompt delivery from the store as a distribution point.”

 

The marriage of the two companies means Amazon can vertically integrate a business it has dabbled in since 2007, when it first offered grocery delivery in Mercer Island, Wash. That’s a blow to rivals like Target and Walmart, which boasted brick-and-mortar stores as the one thing they had over Amazon. The physical stores allow people to try on clothing before buying, still one of the biggest hang-ups about online fashion, and they allow shoppers to choose the groceries they want, lest there be a bruised apple in their order.

 

Those big-box competitors were already disadvantaged by Amazon’s captive audience, an estimated 80 million Prime members, who could theoretically order groceries online or task Alexa, Amazon’s virtual assistant, to prepare a delivery or arrange for a pick-up at the nearest Whole Foods...

 

more

http://www.latimes.com/business/la-fi-amazon-logistics-delivery-20170616-story.html

 

 

3 Winners in the Amazon-Whole Foods Deal

The rest of the grocery industry is running scared, but this is who's going home happy from the blockbuster merger.

 

Jeremy Bowman, The Motley Fool

Jun 16, 2017

 

Amazon.com (NASDAQ:AMZN) dropped a bomb on the grocery industry today.

 

The e-commerce giant known as "the great disruptor" has set its sites on supermarkets with its $13.7 billion acquisition of Whole Foods (NASDAQ:WFM). The move will give Amazon a brick-and-mortar position in the sector for the first time with over 400 stores in some of the nation's most up-and-coming towns and neighborhoods. Whole Foods stores will remain under their own banner, but Amazon will likely use them as delivery hubs and spaces to experiment with new technology.

 

Grocery stocks across the board were getting pummeled on the news as Wal-Mart fell 5% and Kroger and Target were down as much as double digits. However, there were a few big winners in the deal. Let's take a look at the top three.

 

1. Jana Partners

 

The activist hedge fund that took a stake in Whole Foods back in April with plans to push for a sale just cleared a tidy profit. Jana had a 9% stake in Whole Foods and will make a gain of about $400 million on the sale to Amazon as the deal values Whole Foods at $13.4 billion. 

 

Whole Foods CEO, John Mackey, had been feuding with the activist investor over the prospects of a sale. In an interview in the Texas Monthly published just two days before the sale was announced, Mackey called Jana "greedy bastards," protesting their plans for a sale and their bully tactics. He also accused the fund of trying to destroy his and his company's reputation.

 

Still, when the deal closes Jana comes out with 50% profit after holding the company for just two months. Among Jana's other high-profile holdings are Tiffany, where it has gained board seats, ConAgra Foods, and Sherwin Williams.

 

2. John Mackey ...

 

3. Amazon ...

 

more, including links

https://www.fool.com/investing/2017/06/16/3-winners-in-the-amazon-whole-foods-deal.aspx

 

 

Jana Partners Hits Home Run With Amazon-Whole Foods Deal

 

Jim Collins, Great Speculations

via Forbes - Jun 16, 2017

 

This morning's news of Amazon's purchase of Whole Foods turned investor focus to the much-maligned supermarket industry.  For some perspective on broader industry trends, I read the transcript of Kroger's Thursday earnings call.  Looking at the KR stock price chart I knew the call would be ugly, but what was striking was a sense of fear that is not usually present in corporate discussions.  As if conditions in the supermarket industry weren't difficult enough, the Germans are coming.  The entrance of Lidl (which opened its first U.S. store this week and plans to have 100 by this time next year) and the expansion of Aldi (which operates 1,600 U.S. stores now and plans to have 2,000 by the end of 2018 and 2,500 by 2022) promise to make an already brutal industry even tougher. Aldi and Lidl compete on price and use greater scale to improve purchasing power allowing them to even further reduce prices.  This is the classic Wal-Mart model and it is putting even Wal-Mart itself under pressure in its grocery offering.

 

Lest one think the natural and organic market is immune to such pressure, Whole Foods' fiscal second quarter results, reported on May 10th, were actually worse than Kroger's.  WFM's management waited until the 10th paragraph of its release to disclose that comparable store sales fell 2.8%, and gross margin eroded nearly a full point on a year-over-year basis.

 

So, who wants to own a supermarket stock?  Well, Jeff Bezos, of course. As you may have read, Amazon announced this morning that it had agreed to purchase Whole Foods for an all-cash price of $42 per share.  Also, it's impossible to miss the fact that WFM shares are trading above the offer value this afternoon.  Is it possible that another entity throws a higher bid out there?  That is extremely, extremely unlikely. Risk arbitrageurs may be occupying themselves on a Friday, but there is simply no other entity that would be willing to pay that premium for a shrinking company.

 

Amazon shares have risen 3% today, which is as has been widely reported, more than the value of the WFM deal. The market sees this move as part of Bezos' broader vision to disrupt the grocery industry, and, to be sure, WFM will be a small part of Amazon as a whole.   With Whole Foods and its non-unionized stores onboard, Bezos now has a way to access that market without destroying his own margins.  Amazon had $21.5 billion in cash and marketable securities on its balance sheet as of March 31st, so the $13.7 billion cash purchase price is easily manageable.  It's a bold move, and only time will tell if it works, but even if it doesn't, Amazon still has many other avenues of growth.

 

That's the key and that's the genius of this deal.  As the Germans are invading the U.S. market, Wal-Mart is digging in its heels and food price deflation shows no signs of slowing, WFM's largest shareholder managed to make a killing on its Whole Foods holding.

 

So, that's the real winner here: Jana Partners. They were able to force a merger at valuation that is 32x WFM's guidance for fiscal 2017 earnings.  What entity on Earth would possibly 32x EPS for a supermarket company?  Well, one that currently trades 148x 2017 EPS.  Amazon was absolutely the right buyer for Whole Foods. I am guessing Jeff Bezos' doesn't care about Whole Foods's depressing quarterly results, but it took Jana's badgering to get Whole Foods Board to sell.

 

It was an absolute epic win for Jana and Barry Rosenstein.  To get such a premium valuation in the face of such terrible (and worsening) industry fundamentals was a coup.  If it can work at Whole Foods, it can work anywhere, and as I always focus on the next play, I'm looking at Jana's other holdings for another potential merger-based windfall.

 

As per its 13-F filings, Jana's top holdings by dollar value as of March 31, 2017 were:

 

more

https://www.forbes.com/sites/greatspeculations/2017/06/16/jana-partners-hits-home-run-with-amazon-whole-foods-deal/

 

 

Amazon-Whole Foods: Price Likely to Climb

 

By Mark Sebastian, TheStreet

Jun 18, 2017

 

There are a couple of things to be aware of with the Whole Foods (WFM) - Amazon (AMZN) deal, the most of important of which is that it is not a done deal.

 

When carrying cost is accounted for, WFM is trading for over $1 a share above the deal price. Why? Because there is no way this goes down this easy for AMZN. They are essentially scooping WFM on the bottom. WFM was a near-$30 billion company in 2013 and near $20 billion as recently as 2015. AMZN knows they are buying the bottom, and so does Walmart (WMT) , Target (TGT) and Costco (COST) . I think there is a strong chance one of those companies puts in a rival bid, likely Walmart.

 

The two might even be more symbiotic than AMZN-WFM. WMT is strong in suburban markets and even stronger in quasi-cities and surrounding rural areas (think Appleton, Wis.). WMT has its finger on the lower-class all the way to the upper-middle-class market.

 

Meanwhile, Whole Foods (Whole Paycheck, as we used to call it) is essentially an urban market with a strong presence in major cities and wealthy suburbs ... the 1%. For AMZN, in many ways this is just piling on more of its own customer base, and I am not sure how this helps WFM, which has been flailing, other than some ability to get cheaper pricing with more buying power. The technology of going in, grabbing what you want and leaving is cool, but I am not sure that draws anyone new to a Whole Foods; it's really only the 1%, who probably don't want to have a conversation with the checkout lady anyway.

 

My point is that AMZN may end up getting this prize but they are not going to pay $13.7 billion. It will be north of $15 billion or greater. I think the stock ends up getting bought for near $50 a share, about a 20% premium on the Amazon price. Here are a few ideas I have on how one could play this deal:

 

more

http://realmoney.thestreet.com/articles/06/18/2017/amazon-whole-foods-price-likely-climb

 

 

Target - Amazon-Whole Foods Tie-Up Should Be A Drastic Wake-Up Call

About: Target Corporation (TGT)

 

The Value Investor

via Seeking Alpha - Jun.19.17

 

Summary

 

·         Target could become a prime victim of Amazon.com, which is now invading its household-essentials and food & beverage businesses.

 

·         The pace of change is spectacular, and while Target is announcing modest initiatives it remains focused on returning declining earnings to investors.

 

·         Let the Whole Foods deal be a wake-up call for executives who otherwise could soon find themselves in the same position as that of pure play department stores.

 

Target (TGT) is being invaded in more of its key categories by Amazon.com (AMZN) following the acquisition of Whole Foods Market (WFM) by the Seattle-based giant.

 

The news is obviously very bad news for Target, which has already faced stiff competition in its apparel categories, as the push into food and everyday essentials makes Amazon.com a direct competitor in nearly all of Target´s categories.

 

This move seriously impairs the future of Target as long as the business continues to make incremental investments into digital and channels its declining earnings into continued share buybacks and dividend payments. That's especially if the company needs to borrow to finance this trajectory; just look at the case of Fossil (NASDAQ:FOSL).

 

Mr. Cornell has to wake up and dramatically change the strategy, and investors should stop whining about dividends and repurchases if they wish to see any returns on their investment a few years down the road. I am not specifically calling out Target, as the business is doing reasonably well; rather, this deal has to be a wake-up call for executives of the company and its peers.

 

How Bad Is The News?

 

Amazon has grown its sales in the US from $55 billion in 2014 to $90 billion in 2016, and is almost certain to surpass the $100 billion mark this year, as it could double sales in three years...

 

more

https://seekingalpha.com/article/4082234-target-amazon-whole-foods-tie-drastic-wake-call

 

 

Jeff Bezos is $5 billion away from being the world's richest person

 

by Jackie Wattles, CNN

June 18, 2017

 

Watch out, Bill Gates: Jeff Bezos is gunning for your title.

 

Thanks to a surge in Amazon (AMZN, Tech30) stock -- the company just announced that it is buying Whole Foods (WFM) -- Bezos added another $1.8 billion to his net worth, according to Bloomberg.

 

Bezos is now worth about $84.6 billion total, leaving him just $5 billion shy of overtaking Gates as the wealthiest person in the world.

 

He has a good shot. Bezos, 53, is focused on aggressively expanding Amazon, while Gates, 61, wants to give most of his money away.

 

Gates created the Giving Pledge with investing guru Warren Buffett -- the fourth wealthiest person with $76.8 billion -- in 2010.

 

The pledge asks billionaires to commit to giving away at least half of their money during their lifetimes. More than 150 people have signed the pledge, but Bezos isn't one of them...

 

more

http://money.cnn.com/2017/06/18/technology/culture/jeff-bezos-bill-gates-richest/index.html

 

 

Amazon leading tech’s takeover of America

 

Christopher Mims, Wall Street Journal

via The Australian Business Review - June 19, 2017

 

Why does a phone maker get into banking transactions? Why does a social network build a virtual-reality headset? Why does an online retailer buy a grocery chain?

 

Amazon’s $US13.7 billion ($18bn) bid to acquire Whole Foods is just the most extreme example of a larger, more consequential phenomenon: America’s biggest tech companies are spreading their tentacles, pushing into complementary businesses in a play to sustain growth as they saturate the market for their existing goods.

 

Led by hard-charging executives, these companies are fuelled by classic ambition — combined with the almost messianic attitude of those in Silicon Valley that tech can fix every industry on earth.

 

The impact of all this is clear: existing businesses that can’t respond by becoming tech companies themselves are going to get bought or bulldozed, and power and wealth will be concentrated in the hands of a few companies in a way not seen since the Gilded Age. The rest of us will have to decide how comfortable we are buying all our goods and services from the members of an oligopoly.

 

Think about it: Apple, a computer company that became a phone company, is now working on self-driving cars, original TV programming and augmented reality, while pushing into payments territory previously controlled by banks, moves that could make it the first trillion-dollar company in the world. Facebook, still seen by some as a baby-pictures-and-birthday-reminders company, is creating drones, virtual-reality hardware, original TV shows, even telepathic brain-computer interfaces.

 

Google parent Alphabet, still largely an ad company with a search engine, built Android, which now runs more personal computing devices than any other software on Earth. It ate the maps industry; it’s working on internet-beaming balloons, energy harvesting kites, and ways to extend the human lifespan. It’s also arguably the leader in self-driving tech...

 

more

http://www.theaustralian.com.au/business/wall-street-journal/amazon-leading-techs-takeover-of-america/news-story/f052e0fc64a1d7162ce4a4b31773f868

 

 

Amazon Makes Whole Foods Mecca For Millennials

 

Kathleen Kusek, Forbes

Jun 17, 2017

 

Whole Foods Market has delivered on many attributes key to millennial shoppers, yet has not established itself as their grocery store of choice. Despite investment and innovation against this key demographic, Whole Foods has yet to crack their code. Acquisition by Amazon may close the gaps needed to make Whole Foods Market millennials’ retailer of choice.

 

Millennial Must Haves

 

On the plus side, Whole Foods has demonstrated brand authenticity with customer perceptions of integrity in brand standards and product offerings, a hot button for the elusive demo.

 

Whole Foods’ emphasis on wellness meets another millennial mandate. Whereas “healthy” perceptions are often grounded in the absence of negatives like preservatives and artificial colors, “wellness” connotes larger benefits that can improve quality of life. Whole Foods delivers on holistic positive experience far beyond what Albertson’s, Aldi, Kroger, Target, or Walmart ever could.

 

A phoenix from the antiquated concept of health food stores with dusty bins of dried legumes and cardboard boxes of sprouting greens, Whole Foods created gorgeous showrooms for food with a sensory feast of color, smell, taste, and touch. Its offerings are touted not just for the absence of “bad” attributes but also for their proactive and positive powers such as fruits replete with anti-aging oxidants, and essential oils and supplements that may improve sleep quality, muscle tone, and cognitive function.

 

Whole Foods’ environmentally friendly packaging and sensitivity to fair-wage practices of manufacturers squarely deliver on millennials’ desire for corporate social responsibility.

 

Employees are knowledgeable and excited about their products, including fish mongers who are experts on sustainability best practices, and wine clerks who could shame some sommeliers. This sort of expertise reflects the professional pride and passion in work that millennials crave, both for themselves and in others.

 

But Whole Foods doesn’t stop at its rich product array. Services like in-store chair massages, craft beer bars, and pressed juice samples seek to transform the chore of grocery shopping into a weekly opportunity for discovery and self-renewal. Their emphasis on overall physical and mental wellness hits the sweet spot of millennial desires.

 

So with Whole Foods doing so many things right for so long, why hasn’t it won millennials?

 

Price Is a Problem ...

 

Whole Foods Is Woefully Behind in Technology ...

 

Amazon Is the Answer ...

 

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https://www.forbes.com/sites/kathleenkusek/2017/06/17/amazon-can-make-whole-foods-grocery-mecca-for-millennials/2/

 

 

For Amazon, Now Comes the Hard Part

 

By Julie Jargon, Annie Gasparro and Heather Haddon, Dow Jones Newswires

via FOXBusiness - June 19, 2017

 

The web titan joins a crowd with its Whole Foods deal; the 'last mile' puzzle

 

With Amazon.com Inc. wheeling sharply into the grocery aisle, the business of selling food may never be the same.

 

Food retailing was already struggling with low margins and slow sales growth as shoppers shifted buying patterns. New players have swarmed the crowded market, with grocers ranging from giants Wal-Mart Stores Inc. and Kroger Co. to smaller chains fighting to attract consumers, in large part by slashing prices.

 

And the industry has been struggling to figure out how to sell fresh food online.

 

Amazon's agreement to buy Whole Foods Inc. could add to the saturated market as it puts more of its own groceries into the distribution system, while putting new pressure on grocers to figure out how to sell fresh food online lest the web giant beat them. The deal is "a seminal moment in the world of eating," said RBC Capital Markets LLC analyst David Palmer.

 

It isn't at all clear whether the king of e-commerce can do in fresh cabbages what it has done in CDs, books and just about everything else. Amazon and Whole Foods combined still have a small fraction of Wal-Mart's share of groceries. And Amazon faces a "last mile" logistics problem of getting fresh food to doorsteps that it doesn't with other goods.

 

"This is going to be one of the hardest areas for them to get into," said Kent Knudson, a partner at consulting firm Bain & Co., "because of some of the physical challenges of getting food into people's homes."

 

The challenges for grocers today include a new reality: The days of shoppers filling carts during a big weekly trip to their neighborhood supermarket appear over for now. Consumers are more targeted in their shopping habits. They are less loyal to retailers and more willing to buy groceries online. And they are buying more from stores at two poles: ones with cheap prices, and ones that offer high-quality fresh food, often at a premium.

 

Grocery sales last year barely budged from 2015 levels, after rising a bit more than 2% in each of the previous three years, according to market-research firm Nielsen. Kroger ended a 13-year streak of rising quarterly same-store sales this year, while Wal-Mart, which gets more than half its sales from groceries, and Target Corp., have struggled, too.

 

Consumers want "convenience, selection and the right price and they want it now," said Natalie Kotlyar, head of the consumer business practice at consulting firm BDO USA. "Everyone is trying to meld those concepts to create the perfect shopping experience."

 

Amazon, which has revolutionized the way people shop, is betting it can learn the business and solve at least part of the puzzle. It has shown a willingness to forgo profits for years to build market share in an industry. It has cash to burn, deep experience in logistics and a record of relentlessly driving down supplier costs. And its big push into fresh groceries will likely force other food retailers to accelerate efforts at making e-commerce work if they are to remain competitive.

 

E-commerce has been tough to crack for the more-than-$700 billion grocery sector because selling food online is inherently complex...

 

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http://www.foxbusiness.com/features/2017/06/19/for-amazon-now-comes-hard-part-wsj-2.html