Could Walmart buy Phoenix-based Sprouts to match Amazon?

PHOENIX — A recent analysis suggested that Walmart could compete with Amazon’s recent purchase of Whole Foods by acquiring the grocer Sprouts.

That “Real Money” analysis on TheStreet.com said that after online retailer Amazon bought Whole Foots Markets Inc. for a reported $13.7 billion, Walmart “could consider purchasing Sprouts Farmers Market Inc.”

Sprouts is a grocer based in Phoenix while Walmart has a regional headquarters in Phoenix, as noted by Phoenix Business Journal’s Mike Sunnucks.

The Street’s Ed Ponsi points out that buying Sprouts would be a significantly smaller purchase than that of Sprouts, but it may not matter, he said.

“Whole Foods is the much larger company, generating $15.86 billion in annual revenue vs. Sprouts’ $4.18 billion,” he wrote. “However, when it comes to selling the products of these respective companies online via Amazon and Walmart, those revenue figures may be irrelevant.”

Ponsi made comparisons between Whole Foods and Starbucks, saying that the coffee chain is having trouble with its new model of allowing customers to order drinks online and pick them up in the store. He said if a retailer like Amazon or Walmart introduced a similar option for its grocery stores, it would be even more difficult to manage than Starbucks coffee.

“Picking up these orders now becomes a logistical nightmare, and the easiest solution is delivery,” Ponsi wrote. “In this scenario, the fact that Whole Foods has more locations than Sprouts Farmers Market becomes a moot point. No physical location could handle the crush of humanity that would result from the overwhelming number of pickup orders.”

The “Real Money” article also notes that perhaps Walmart doesn’t buy any company, because — unlike Amazon — it already sells groceries. Instead of trying to acquire a new company to compete with Amazon, Walmart could just update the business model of its existing stores.

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