Whole Foods shareholders back Amazon deal

Customers shop for produce at a Whole Foods market on October 15, 2014 in San Francisco, California.Image copyright Getty Images Image caption Analysts expect Amazon's acquisition to lead to increased options for online ordering and delivery of food

Amazon's plan to buy Texas grocer Whole Foods for $13.7bn (£10.7bn) cleared an initial hurdle on Wednesday, as shareholders of the supermarket voted in favour of the deal.

Shareholder approval had been expected for the bid, which has been greeted as a game-changer for the food industry.

The merger would combine Whole Foods' physical footprint with Amazon's delivery prowess.

US competition authorities must now sign off on the deal for it to advance.

Whole Foods approached the e-commerce giant about a merger this spring, as it grappled with falling sales and pressure from investors such as Jana Partners to improve performance.

Amazon initially offered $41 per share, eventually bumping the price to $42 per share.The $13.7bn value includes assumption of Whole Foods' debt.

Physical footprint

The deal allows Amazon to leap into the food industry, an area that it has been experimenting with for years.

It also gives the e-commerce firm an instant physical footprint via Whole Foods' 470 stores in the US, Canada and UK.

That matters because customers still prefer to shop in person, said Miriam Burt, a research vice-president in retail at Gartner,

"For almost all categories of products besides books, music and videos, our research is telling us that customers still prefer to go into the store and interact with the products," she said.

Ms Burt said she expected that all grocery stores would eventually develop a hybrid model of online ordering and in-store pick-up.

Walmart, one of the biggest food retailers in the US, said it was moving in that direction on Wednesday, as it said its products would be available via the voice-activated Google Assistant[1].

"Each of the major grocery retailers will get to a point where they suggest a use case where you're driving home from work, you order your groceries online and then you pick it up from your local store.It's about making the customers' lives easier," Ms Burt said....


  1. ^ the voice-activated Google Assistant (www.bbc.co.uk)

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Walmart and Google to offer voice-enabled shopping

Walmart staff stock shelves in the supermarketImage copyright Getty Images

Corporate giants Walmart and Google are teaming up to enter the voice-shopping market, currently dominated by Amazon.

From next month, US consumers will be able to buy Walmart products using the voice-activated Google Assistant platform on phones and home devices.

Amazon's AI virtual assistant Alexa[1] already enables users to shop directly from the online retail giant.

The partnership enables Walmart to challenge Amazon's dominance of the US voice shopping market[2].

Walmart's head of e-commerce Marc Lore wrote in a blog post[3] that the retailer plans to expand the use of voice-activated shopping across its 4,700 stores to "create customer experiences that don't currently exist within voice shopping anywhere else".

For example, Walmart, which owns the UK's Asda supermarket, could offer consumers the choice of picking up an order in store at a discount, or enable users to use voice shopping to purchase fresh groceries across the country.

Hundreds of thousands of products will be available.

Pushing back

Amazon has long challenged brick-and-mortar retailers by offering items at cheaper prices, often with free delivery.

Even though most retailers now have their own online stores, Amazon continues to dominate online sales, and the threat has only increased with its forays into same-day delivery[4] and artificial intelligence-based voice shopping.

Google has been offering high street retailers a way to fight back by offering their products on its Google Express[5] online shopping mall.

Walmart will be offering the most items of any retailer on the Google Express platform.All users must do is link their Walmart accounts to Google Express.

Tesco to start same-day delivery across UK[6]

Asda reveals 2016 slump in sales[7]

Amazon accuses Walmart of being a bully[8]

Miriam Burt, a research vice president in retail at Gartner, said that the move is not just about revenue or technology, but more about making customers' lives easier.

"We need to watch the cohort of customers that's starting to grow around this, particularly Gen Z, which is anyone born after 1995, who are highly influential," Ms Burt told the BBC."They're very much into conversational commerce, through instant messengers like WhatsApp, Facedook Messenger and WeChat.

"If you translate that into this, shopping is very convenient for them with voice activation.But whatever way you interact with the retailer, it has to be a really good customer experience from start to finish.If parts of that experience are bad, it will be very hard for the customer to be loyal."

Grocery deliveries

Walmart has been making a gradual march onto Amazon's turf.

In April, Amazon expanded the Prime Now same-day delivery service to include certain items like food and medicines.Now Walmart has teamed up with ride-hailing app Uber to offer online grocery deliveries in six states[9].

In June, Amazon accused Walmart of "bullying" its technology suppliers into shunning Amazon's cloud computing service[10].

Walmart has also challenged Amazon by offering discounts to customers who buy online and pick up in-store, and free two-day shipping for purchases of $35 or more.The latter move prompted Amazon to lower its own threshold for free shipping in order to stay competitive.

Over the past two years, Amazon has been making an increasing play for offline bricks-and-mortar shops - from the physical book shop Amazon Books[11], launched in Seattle in 2015, to its ongoing acquisition of the organic food chain Whole Foods[12].

Amazon also has a grocery delivery deal in the UK with Morrisons[13] supermarket....

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ECB chief Draghi: QE has made economies more resilient

Mario DraghiImage copyright Reuters

European Central Bank President Mario Draghi has said unconventional policies like quantitative easing (QE) have been a success both sides of the Atlantic.

QE was introduced as an emergency measure during the financial crisis to pump money directly into the financial system and keep banks lending.

A decade later, the stimulus policies are still in place, but he said they have "made the world more resilient".

But he also said gaps in understanding these relatively new tools remain.

As the economic recovery in the eurozone gathers pace, investors are watching closely for when the ECB will ease back further on its 60bn euro (£55bn) a month bond-buying programme.

Central bankers, including Mr Draghi, are meeting in Jackson Hole, Wyoming, later this week, where they are expected to discuss how to wind back QE without hurting the economy.

On Monday, a former UK Treasury official likened the economic stimulus to "heroin" because it has been so difficult to wean the UK, US and eurozone economies off it.

In a speech in Lindau, Germany,[1] on Wednesday, Mr Draghi defended QE and the ECB's policy of forward guidance on interest rates.

"A large body of empirical research has substantiated the success of these policies in supporting the economy and inflation, both in the euro area and in the United States," he said.

The ECB buying relatively safe assets such as government bonds means that banks can lend more and invest in riskier assets, which in turn improves access to credit for riskier borrowers, Mr Draghi said.

He added:"Policy actions undertaken in the last 10 years in monetary policy and in regulation and supervision have made the world more resilient.But we should continue preparing for new challenges."

Critics of QE argue it has inflated asset bubbles and stoked inequality by rewarding the asset-rich while punishing savers.

Lord Macpherson, who was permanent secretary to the Treasury when the Bank of England started QE in 2009, tweeted on Monday:"QE like heroin:need ever increasing fixes to create a high.Meanwhile, negative side effects increase.Time to move on."

Due to QE, the ECB's balance sheet had swollen to 3.7 trillion euros (£3.4tn) by the end of last year, while the US Federal Reserve held $4.2tn (£3.3tn) of assets and the Bank of England had £500bn....


  1. ^ speech in Lindau, Germany, (www.ecb.europa.eu)

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WPP cuts growth forecast as second quarter sales slow

Sir Martin Sorrell is the chief executive of WPPImage copyright Getty Images

Shares in WPP fell by more than 10% at the start of trading after the advertising giant reported slowing sales and warned about future growth.

The company said that group performance had been "much tougher" for the first seven months of its financial year.

It blamed growing economic uncertainty, including due to a "rise of populism" in the UK and the US, and "bumpy" growth in Brazil, Russia and China.

WPP now expects sales growth of 0%-1% compared to previous forecasts of 2%.

The reduced forecast puts WPP on course for its worse year since 2009 when like-for-like sales fell by 8.1% during the global recession.

Total group revenue rose to £7.4bn for the six months to June from £6.5bn.Pre-tax profit grew by 52.4% to £779.2m.

However, WPP said that like-for-like revenue decelerated over the six months to June, in particular the second quarter when client spending was "under considerable pressure" in the fast moving consumer goods or packaged goods sectors which chief executive Sir Martin Sorrell said make up a third of its business.

Conditions worsened in July when like-for-like revenue shrank by 4.1%.The company said that like-for-like sales are down 0.9% for the year to date.

Sir Martin said that there has been a "trifecta" of pressures on the business.

He said that "digital disruption" was forcing companies to change their business models and reach customers in different ways.

Activist shareholders, fuelled by cheaper money, were pushing businesses to cut costs.

US worries

Also, some investors were practising "zero-based budgeting", where they start with a blank balance sheet and all expenses have to be justified.

WPP said that new business wins and increased client spending should help turnover in the second half of its financial year as well as into 2018, buoyed by events such as the Russian World Cup, the mid-term Congressional elections and the PyeongChang Winter Olympics.

However, the company also indicated that uncertainty would continue next year because of economic and political worries in the US.

Sir Martin told the BBC Today programme:"Like it or not, the Trump administration has been much more open to business than the Obama administration, certainly in terms of connection."

But he said:"That hasn't translated into significant policy change for a number of reasons."

In a statement earlier,[1] WPP said:"The limitations of the new [Trump] administration seem to be jeopardising the anti-regulatory, infrastructure and tax reduction programme that was promised."

But it added:"America First, if the new administration's plans are finally implemented, will almost definitely mean a stronger American economy, at least in the short-to medium-term."...


  1. ^ In a statement earlier, (www.investegate.co.uk)

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Heathrow landing fee claim not credible, says ex-BA boss

Heathrow airportImage copyright Getty Images

The former boss of British Airways, Sir Rod Eddington, says Heathrow's claims it will not raise landing charges to pay for a new runway are not credible.

Sir Rod told the BBC it was "very difficult to see how that is possible".

"More importantly, the airlines themselves do not believe that it is," the Australian businessman added.

He is leading a consortium advising Surinder Arora, the hotel magnate who claims to have come up with a cheaper plan for Heathrow's third runway.

Mr Arora claims his scheme will cost up to £7bn less than Heathrow's, which is costed at £17.5bn.

Heathrow has dismissed the Arora scheme, saying its ideas had already been ruled out by the Airports Commission, the government body that studied potential sites for a new runway in the south east of England.

Sir Rod, who drew up an influential report on Britain's transport infrastructure for the then chancellor Gordon Brown a decade ago, said the Arora plan had sprung out of concerns that airlines and other businesses at Heathrow had with the airport's own scheme.

"They are concerned about the costs," said Sir Rod, one of the world's most experienced airline bosses having run Australian airline group Ansett, Cathay Pacific and British Airways.

Image copyright Getty Images

The full savings that could be achieved would depend on final decisions on the orientation and length of the new runway, but significant costs could be taken out in the construction of a new terminal and how the existing terminals were adapted, he said.

"We can't gild the lily - we need a new runway, but if it's not affordable, it runs the risk of driving business away from Heathrow, not attracting it."

Heathrow said it had shared its plans with airlines "at every step".

"While the Arora plan may appear to reduce financial costs, it was in essence, rejected by the Airports Commission because of the significant environmental burdens it would impose on many," the airport operator said.

"We remain 100% committed to delivering expansion affordably - but we will not compromise on commitments made to local communities."

Analysis:Dominic O'Connell, Today business presenter

Image copyright Getty Images Image caption Sir Rod wrote an influential report on UK transport for Gordon Brown

Given Sir Rod Eddington is advising a rival, you might expect him to be critical of Heathrow's runway plans - in particular its claim that it can build the new strip without raising charges.

But Sir Rod's voice carries weight.

Not only is he a former chief executive of British Airways, the main airline at Heathrow, but he also ran Ansett, the now defunct Australian carrier, and Hong Kong's Cathay Pacific.

He also did an influential report on British transport for Gordon Brown, is doing a similar job now for the Australian government, and sits on the board of 20th Century Fox, one of Rupert Murdoch's two big media companies.

His intervention - he says he doesn't believe Heathrow can keep costs down, and hints charges may have to double - comes at a crucial time for the airport.

While the government has been supportive of a new runway at the London hub, its wafer-thin majority means nothing can be taken for granted.

Having a senior figure like Sir Rod attacking its financial credibility is far from helpful....

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