Amazon’s deal to acquire Whole Foods merger may seem like a dream come true to some, but there’s a realistic chance Walmart could still swoop in to trump Amazon’s $13.7 billion offer, according to JPMorgan.
“From our perspective, we have a hard time seeing Kroger, Costco, or Target coming in over the top. We do think there is a chance that Walmart makes a bid. There are compelling reasons for it to do so (adding new, generally wealthier customers; acquiring a strong brand; generating synergies and efficiencies; et al), in addition to keeping Amazon out of its wheelhouse.”
- Grocery is its strongest advantage right now against Amazon, its top competitor. That moat is significantly diminished once Whole Foods is safely in Amazon’s clutches.
- Walmart could leverage the distribution network of its roughly 4,000 locations to help expand Whole Foods’ audience.
- Whole Foods would also fit nicely into Walmart’s network of stores without overlapping too much, as their stores are concentrated in urban, high-income locations.
“Given Walmart’s 20%+ share in grocery, why should the company spend $14B+ on what it’s already good at (selling food via brick-and-mortar) when the money instead could be used to expand and improve Jet.com and Walmart.com? Jet.com is Walmart’s urban/millennial alternative to Amazon Prime, and Walmart.com is in many ways the ‘forgotten man’s’ alternative to Prime.”
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