Amazon sent shock-waves through the stock market when it announced the purchase of Whole Foods Market for $13.7 billion in cash, marking the biggest transaction ever for the e-commerce giant as it pushes deeper into groceries.
In Whole Foods, Amazon is acquiring a company that recently has come under pressure from investors for its lagging performance.
Amazon has recently begun experimenting with bookstores and a small grocery, but this is by far its most ambitious move into physical retail.
Moody's lead retail analyst Charlie O'Shea said the deal could be "transformative, not just for food retail, but for retail in general". A prototype grocery store called "Amazon Go" opened past year in Seattle, Washington.
Perhaps, Basaru speculated, the acquisition would let consumers use Whole Foods stores to exchange or return items they bought on Amazon. Amazon, which is known for squeezing suppliers, will take over a natural and organic grocer pioneer brimming with 456 stores and high-end shoppers but struggling to rein in prices and integrate technology.
The damage didn't stop there: Food companies themselves, like Hershey and Campbell Soup, also slumped because of investor concerns that Amazon will do for their products what it does for everything else - cut prices ruthlessly.
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Mackey will remain as CEO of Whole Foods after the deal closes, and the headquarters of the grocery supermarket chain, now under pressure from fierce competitions, will stay in Austin.
Once the deal gets the required shareholder and regulatory, it is expected to be closed in the second half of 2017.
Does that mean Amazon will own, like, everything - the digital world and the physical?
Both companies said there will be no layoffs, but they did not respond to other questions about Amazon's plans for Whole Foods.
"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", said Amazon found and chief executive Jeff Bezos. Whole Foods will keep operating stores under its name. So when you give consumers the flexibility and power to procure the goods they want, and have them delivered straight to their front door, that's a winning proposition. Kroger sank 11.48 percent, while Costco dropped 5.64 percent.
Pachter said that even if Amazon gets 20 million members of its Prime loyalty program to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million not going to traditional supermarkets. There could be all kinds of initiatives to repurpose the brick-and-mortar store. In cash! That breaks down to Jeff Bezos and company paying $US42 ($55) per share for a USA chain of health food and lifestyle stores.
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