How The Amazon-Whole Foods Deal Changed The Grocery Industry


CNBC

Jun 18, 2018

Amazon bought Whole Foods one year ago. At the time of the deal, which came as the grocer was under pressure from activist investor Jana Partners, Whole Foods was struggling.

It had been first to the specialty and organic game, but as larger competitors also moved into the space, it was ceding ground. With scale and better infrastructure, these retailers could offer many of the same products at a better price. Whole Foods was behind its competitors in technology and developing a loyalty program.

Its challenges showed through in its finances. In 2017, before its sale to Amazon, same-store sales were declining 1.5 percent, according to regulatory filings. The previous year, they were declining 2.5 percent.

The deal between the two — which was at one point known as Project Athena — came together under intense secrecy, after Whole Foods CEO John Mackey reached out to Amazon CEO Jeff Bezos through an industry consultant. Amazon told Whole Foods if word of the deal leaked, it would call it off.

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