- Grocery store shares tumbled after Amazon said its purchase of Whole Foods will go through on Monday.
- The acquisition will lead to many perks for Amazon’s grocery business, but some say the advantages are unfair.
- Restaurant and meal-kit services could also be hit by Amazon’s growing food business.
Amazon’s confirmed purchase of Whole Foods caused many grocery store shares to tumble — and for good reason.
Once the $US13.7 billion deal goes through, many popular Whole Foods groceries will get cheaper.
The organic grocer’s private label products will also be available on Amazon, and will likely bolster the network for grocery delivery service AmazonFresh.
The advantages now shared by Amazon and Whole Foods adds to a “retail monopoly that threatens every corner of our nation’s economy,” The United Food and Commercial Workers International Union wrote in a letter to the Federal Trade Commission before the deal went through.
The UFCW represents 1.3 million retail workers.
“Regardless of whether Amazon has an actual Whole Foods grocery store near a competitor, their online model and size allows them to unfairly compete with every single grocery store in the nation,” Matt Perrone, the union’s president, wrote in the letter.
Amazon and Whole Foods maintain the pairing will create more retail jobs rather than hurt them.
Small grocers are particularly vulnerable, according to analysts at Moody’s Investors Service.
“As the biggest retailers fight over market share, smaller retailers are increasingly vulnerable, and broad industry-wide challenges raise the alarm for the smaller players to weather competitive storms indefinitely,” Moody’s writes in a recent report.
In addition to grocery stores, the acquisition could also hurt restaurants and meal-kit services, reports Sarah Whitten at CNBC.
“The tech giant has expansive consumer data collection abilities and its online convenience has been a drain on retail locations, leading to a drag on restaurant sales,” Whitten writes.
Whitten also speculates that Amazon’s vast bank of consumer spending data could hurt other businesses.
“The tech giant has expansive consumer data collection abilities and its online convenience has been a drain on retail locations, leading to a drag on restaurant sales,” she writes.
Finally, meal kit services like Hello Fresh and Blue Apron could be dinged by Amazon’s partnership with Whole Foods.
Last month, Amazon began selling kits that contain all the ingredients necessary to cook a selection of meals, including options such as stir fry, burgers, and tacos. Owning Whole Foods will likely give Amazon access to more premium ingredients and new customers.