Amazon deal rocks retail sector

WHOLE FOODS-M-A  AMAZON

Some investors may be wondering whether Amazon could disrupt grocery stores the way it upended the bookstore business.

Amazon announced Friday they would buy Whole Foods Markets; a move that sent Kroger shares tumbling. It adds that it plans no job cuts as part of the deal. The acquisition marks an enormous step for Amazon, moving the company from being a predominantly web-based retailer to one that operates physical stores too.

On Friday, Wal-Mart said it would buy Bonobos, a popular internet apparel retailer; past year, it acquired Amazon competitor Jet.com and appointed that company's chief executive, Marc Lore, to strengthen its e-commerce operation. According to the analyst, the grocery industry remains one of the "largest and most under-penetrated markets" for the e-commerce giant.

And while department stores, electronics chains and other retail sectors have been closing stores, the number of grocery stores has continued to grow.

America's grocery stores are undergoing tremendous change.

Food industry experts say the online giant tapping into the brick-and-mortar world is a game-changer for traditional grocery chains.

"The anticipation was that grocery will go to about 20% online in the next couple of years", she said.

Wind howling as final round at Erin Hills gets under way
He still built a six-shot lead through 36 holes, despite hitting his tee shot into the ocean on the 18th hole and salvaging bogey. He had a six-shot lead at the turn but hit only three fairways on the nine and missed a 4-foot par putt on the 18th for a 70.

The move comes at a challenging time for grocers. Because that's what Amazon does.

Some also speculated that a European grocery conglomerate could come knocking on Whole Foods' door, though Amazon's growing power would make it a formidable competitor to take on. Those stores would solve much of Amazon's "last-mile" delivery challenge for fresh groceries - perhaps the top reason it hasn't made a dent in the grocery shopping of the 60 percent of millennials who buy other items from Amazon, he said.

Whole Foods Market's share price rose more than 29% on Friday.

The acquisition, expected to close this year, is more than 10 times larger than what Amazon spent on its next-biggest deal, the purchase of online shoe retailer Zappos in 2009.

"Amazon will redefine convenience", said Bahige El-Rayes, a principal in the retail practice of A.T. Kearney.

Online delivery of groceries so far has been tough for any company to pull off because of customers' concerns about the quality of meat and produce, Wedbush Securities analyst Michael Pachter said. "They're greedy bastards, and they're putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it's in their self-interest to do so". It also charges customers delivery fees.

Stock rates of supermarkets, food producers, processing companies, retailers, and shopping malls lost over U.S.$35 billion nearly immediately after the news was released, indicating the potential effect this could have on the various industries.

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