Amazon and Whole Foods Acquisition

June 20, 2017
SVN Imbrie Realty Staff

E-commerce giant Amazon announced on Friday, June 16, 2017 its intention to acquire Whole Foods for $13.7 billion dollars. The announcement sent shock waves throughout the grocery industry. Many Wall Street experts are looking at this acquisition as a way for Amazon to solve its “final mile” problem. Without proper distribution presence on the ground, Amazon Fresh service has struggled to operate its pickup and drop off service. This acquisition will help Amazon solve that issue and improve its distribution/delivery efficiency.

The acquisition is expected to disrupt the grocery business sector. Amazon will predictably revolutionize a sector that has been slow to adapt to the internet age. Grocery retailer who fail to modernize will not be able to keep up with the e-commerce giant.

Amazon’s entry into the grocery business is not the only disruptive force in the grocery sector. German based grocery chains Aldi and Lidl are also planning an aggressive expansion in the US market. Traditional big box retail Walmart purchased Jet.com in the Q3 of 2016 and has fully Integrated the brand into its core business.

So, what does this mean for retail shopping center owners? It might be too soon to tell how this acquisition will affect owners. However, grocery stores have traditionally been the anchor of many shopping centers. If traditional grocers fail to compete with Amazon and its deep pockets, we may be looking at more vacancies of anchor tenants. This may trigger a trickle-down effect on surrounding tenants.

Please contact Ryan Imbrie at 503.208.9403 or email him at ryan.imbrie@svn.com if you have questions or concerns regarding how this acquisition will impact your investment.