Amazon to buy Whole Foods for $13.7 bn; Walmart, Target, Kroger should be Terrified

E-commerce giant Amazon Inc. on Friday announced that it would buy Whole Foods Market Inc. for $13.7 billion and it is a step forward to embracing brick-and-mortar stores that the giant has recently been experimenting with. The deal will grant Amazon with control over more than 400 stores, integrating the stores with technology.

Amazon has previously offered food delivery through its Fresh service for over a decade but it has not made its mark in the grocery market. This deal will put it on the map of the $700 billion grocery market.

The deal had a dipping effect at the shares of other supermarkets, food producers, payment processors and shopping malls collectively of around $35 billion in US market value on Friday as they received the news of the deal. Kroger Co shares fell 9.2 percent, while Walmart stores Inc saw a loss of 4.7 percent. Amazon, on the other hand, saw an increase in its share value of around 2.4 percent with around $11 billion adding to its market capitalization.

Supermarkets now have to compete for prices with a retailer like Amazon, aside from each other and grocers like Walmart and Target, and Amazon has the financial capacity to price aggressively.

While the deal is still to be executed, Whole Foods has pointed out that the brand name would remain the same in the stores, headquarters will remain in Austin and John Mackey will stay on as CEO.

It is predicted that Amazon could become the ninth-largest retailer by 2017 and third-largest grocery retailer by 2021. Amazon would be dealing with perishable food, non-perishables, and consumer products.

It is estimated that Americans spend about 6 percent of their income on food and it is a regular expense. Expanding into the grocery market would not only bring profits to Amazon but a room for great expansion.

Load More Related Articles
Load More By Zim Taylor
Load More In Business

Check Also

Buy Branded TVs & Experience the Panoramic View

Television not only keeps you entertained and updated with current affairs but also plays …