AMHERST, N.Y. (WIVB) – The business world was rocked after Amazon announced it was buying Whole Foods Market for more than $13 billion. The news caused stock in the grocery/retail industry to drop–Walmart’s plummeted.
Western New York, though, seems to be in a unique position if this mega-merger goes through. Whole Foods is building a new store in Amherst, while Amazon has just confirmed they are converting a warehouse in Lancaster to what they call a “sortation center”.
That might put Western New York slightly ahead of the curve, as Amazon takes a slight turn from online retailing into brick-and-mortar establishments. But this planned merger seems to be focused strictly on organic products, where Whole Foods Market is an industry leader.
University at Buffalo Marketing Professor Debu Talukdar points out, organic foods is the fastest growing sub-sector of the grocery industry, and competition is heating up.
With Whole Foods in such close proximity to an Amazon warehouse, it shortens the supply chain and increases efficiency, which Prof. Talukdar said, can bring down costs to consumers.
“As a consumer, I am happy about this merger. It is bringing in from the organic side–which I am interested in as a consumer–one of the most well-known and best retailers,” the professor said. “Now it is getting financial and technological support from one of the biggest retailers in the world.”
Another selling point of those efficiencies, said Talukdar–it could make organic, wholesome foods more accessible for consumers on tight budgets.
Wall Street seemed to like the deal. Whole Foods stock, which has been slumping of late, spiked by nearly 30%, following the merger announcement. Amazon jumped by 4%, but everywhere else in the food industry–from Walmart to Target to General Mills and Campbell Soup–took it on the chin.
Industry analysts expect the Amazon-Whole Foods deal to close later this year.