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Whole Foods purchase is a giant push by Amazon into physical retail

Amazon is buying Whole Foods. (AP Photo/Gene J. Puskar)

The joke going around the Twittersphere is that Amazon’s $13.7 billion purchase of Whole Foods happened when CEO Jeff Bezos ordered groceries.

All joking aside, this is a big deal, according to GeekWire co-founder and editor Todd Bishop.

“This is Amazon making a giant push into physical retail,” he told Seattle’s Morning News.

Whole Foods operates more than 400 stores in North America and the UK, which gives Amazon lots of room to experiment with its developing technologies over time.

“For now, Amazon will let them operate as is,” Bishop said. But over time, he says they will implement other technology, such as Amazon Fresh, and the Amazon Go grocery store model.

“This gives Amazon a giant new canvas to paint upon,” Bishop added.

The Associated Press reports Inc. will pay $42 per share for Whole Foods Market Inc., including debt. That marks an 18 percent premium to Whole Foods’ closing price on Thursday.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales.

The grocery chain has been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe’s.

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The company, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods, and has said customers may be choosing “good enough” alternatives closer to home. In addition to other natural and organic grocers, it has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets such as Kroger.

The deal is expected to close in the second half of 2017.

The Associated Press contributed to this story.

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