Amazon is getting into the grocery business in a bigger way than anyone imagined.
The online retailer, which has spent the last few years toying around with experimental physical stores, said it had 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.
Whole Foods radically transforms Amazon, which has grown into a retailing juggernaut by undercutting rivals and primarily relying on its more efficient online business. It's helped kill of a myriad of physical retailers like Circuit City and Borders, and yet it's getting into that very business. By acquiring the grocery train, known for its upscale, healthy food, the online retailer will get 460 stores in the US, Canada and the UK.
"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy," Amazon CEO Jeff Bezos said in a press release.
Amazon isn't a stranger to groceries, offering its $300-a-year grocery service, AmazonFresh, in various cities around the country. The company has invested in various book stores, including opening one in New York.
ADVERTISINGThen there was Amazon Go, a concept grocery store with no staff and an automated check-out system. While just a single test store in Amazon's campus, the news was significant enough that the retail industry freaked out.
It's unclear whether these innovations, which include bookstores with dynamic pricing and no price tags, will make their way to Whole Foods. Amazon said that Whole Foods would remain a separate brand and still operate in its Austin, Texas, headquarters under CEO John Mackey.
Whole Foods exploded with popularity by offering a wide selection of organic and natural foods for a premium price. "South Park" made a Whole Foods store the center of an arc of episodes on the gentrification of its town.
But the chain in recent years has struggled to stand out as other supermarket chains expanded their own organic and natural food offerings, often at lower prices. In February, the company said it was reducing the anumber of stores -- the first time since 2008 -- as it cut its forecast for the year.
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