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The history of Amazon and Whole Foods’ sometimes-rocky marriage, which kicked off 5 years ago with a $13.7 billion acquisition

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amazon whole foods marketAmazon bought Whole Foods Market for $13.7 billion in 2017.

Gabe Ginsberg/SOPA Images/LightRocket via Getty Images and Steve Russell/Toronto Star via Getty Images

  • Amazon bought Whole Foods Market for $13.7 billion in 2017.
  • Whole Foods was driven to Amazon over hostile-takeover concerns.
  • For Amazon, acquiring a major national grocery chain presented a new challenge in the brick-and-mortar space.

Amazon bought Whole Foods Market for $13.7 billion on August 24, 2017. 

It was a much-talked about match that shook the world of retail. The deal saw an online powerhouse acquire a beloved organic grocer. It also marked a massive foray into the realm of brick-and-mortar grocery for Amazon. 

For Whole Foods, the acquisition brought about some cultural shifts within the stores. And for Amazon, the purchase of a prominent national grocer proved to be a major experiment in the brick-and-mortar space. 

Since then, the relationship has endured, despite some rocky adjustments. 

Whole Foods traces its roots back to Texas.John Mackey, right, with Whole Foods employee David Matthis at the opening of a Houston store in 1984.John Mackey, right, with Whole Foods employee David Matthis at the opening of a Houston store in 1984.

Whole Foods

John Mackey and Renee Lawson launched the business that would become Whole Foods Market in 1978 in Austin.

According to the company’s website, Whole Foods grew out of the 1980 merger of Mackey’s and Lawson’s SaferWay store with Craig Weller’s and Mark Skiles’ Clarksville Natural Grocery.

Source: Insider, Whole Foods

Whole Foods Market grew rapidly.Whole Foods New York CityA person shops at a Whole Foods grocery store in the Manhattan borough of New York City, New York, U.S., March 10, 2022.

Carlo Allegri/Reuters

With its focus on fresh and organic options, the grocery business took off in the 1980s and underwent rapid expansion that would see Whole Foods Markets open across the United States.

Whole Foods says that at the time of the company’s founding, “there were less than half a dozen natural food supermarkets in the United States.”

Meanwhile, Amazon came along in the early 1990s.A worker assembles a box for delivery at an Amazon fulfillment centerAn Amazon package.

Clodagh Kilcoyne/File Photo/Reuters

Jeff Bezos founded the company that would become Amazon in 1994 in Seattle. Famously, Bezos started off by focusing on selling books over the internet. 

Source: Insider

Over the decades, Amazon grew to become an e-commerce behemoth.Amazon boxes on a conveyor beltAmazon packages.

Clodagh Kilcoyne/Reuters

In 2021, the company overthrew Walmart in overall sales.

Source: Insider, Insider

In 2017, Whole Foods ran into trouble.John Mackey speaks on Capitol Hill in Washington, DC on December 9, 2008, after Whole Foods said it would challenge the Federal Trade Commission’s antitrust review of its proposed acquisition of Wild Oats.Whole Foods founder John Mackey.

Mark Wilson/Getty Images

In his book “Conscious Leadership,” Mackey wrote that around 2017, activist investors initiated a takeover bid. The founder said that he felt a takeover would ruin Whole Foods’ unique brand. 

Source: Insider

But Whole Foods couldn’t find a buyer.Warren Buffett speaks onstageWarren Buffett speaks onstage during Fortune’s Most Powerful Women Summit at the Mandarin Oriental Hotel on October 13, 2015 in Washington, DC.

Paul Morigi/Getty Images

Mackey responded by approaching billionaire Warren Buffett and grocery giant Albertsons, but neither was interested in purchasing the company.

Then, Mackey called on Amazon.jeff bezosAmazon founder Jeff Bezos.

Kevin Mazur/Getty Images for DJ

Bezos was interested in Whole Foods. On August 24, 2017, the companies announced that the deal had gone through. Amazon bought Whole Foods for $13.7 billion.
Source: Insider

The partnership has hit some snags, however.Whole Foods in Washington DC at Glover Park.Whole Foods in Washington DC at Glover Park.

Taylor Rains/Insider

The acquisition saved Whole Foods from a hostile takeover. But in the years since, there have been some documented struggles.
Source: Insider

Some say the feel of Whole Foods stores have changed …A sign inside Whole Foods that reads "Prime Member Deal."

Smith Collection/Gado/Getty Images

In 2020, Whole Foods employees told Insider that the workers who picked and packed online orders for Amazon Prime customers were beginning to crowd the stores, making their jobs more difficult.

Source: Insider

The purchase has also led to a culture shift at the grocery chain.whole foods employeeA Whole Foods employee stocks produce at a California store.

Smith Collection/Gado/Getty Images

Amazon also ended up pushing to transform gig workers responsible for online orders into Whole Foods employees, leading to somewhat of a culture clash, according to CNBC.
Source: CNBC

But Whole Foods remains Amazon’s most successful brick-and-mortar venture.Amazon '4-star' storeAmazon has shuttered dozens of its ‘4-star’ stores.

Dan Kitwood/Getty Images

Amazon’s other brick-and-mortar and grocery ventures have struggled over the years.
Source: The New York Times

Amazon appears to be rethinking its approach to physical stores.Amazon Fresh store London, UKInside an Amazon Fresh location.

Grace Dean/Insider

Specifically, Amazon is stopping its rollout of self-checkout Amazon Fresh stores, after its existing locations failed to post strong-enough sales. Also this year, Amazon shuttered its 4-Star chain and book stores.

Source: Insider,   Insider

In the five years that have passed since Amazon’s acquisition of Whole Foods, much has changed.A Whole Foods in Union Square NYCA Whole Foods in New York City

Noam Galai/Contributor

Mackey is due to retire from Whole Foods on September 1. Bezos stepped down as Amazon CEO in 2021 and now serves as its executive chairman.  Despite the initial culture clash, Whole Foods has become a major contributor to Amazon’s portfolio.

Source: CNBC

Read the original article on Business Insider

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