Amazon has just purchased Whole Foods for $13.4 billion, and now stores such as Walmart, Target, Kroger and Costco have seen their shares tumble. Over the past few years, Grocery Retailers have fought against online entrants into the market, and with this most recent purchase, the fight has only grown. Amazon has massive warehouses, along with a seemingly endless supply of funds, that will completely change the industry. With now hundreds of physical stores, Amazon has moved form being an online retailer into brick and mortar.
What this Means:
The large grocery giants must now deal with this oncoming onslaught of a move into a more online oriented way of purchasing groceries.
This includes companies such as Blue Apron, which delivers packaged meals right to your door. This being said, many of these large grocery retailers do have advantages of their own. For example, Walmart has 4,500 stores, while Whole Foods has a small 460 stores. Walmart has also began to adapt to the ever changing way of grocery shopping, including instituting an e-commerce sector, which allows for in store grocery pickup. A spokesperson for Walmart, Randy Hargrove, said that they felt "great" about their e-commerce and online grocery business. This is more than likely going to be a commonality between many of the large retailers that will have to adjust to the constantly changing wants of their customers, and will have to eventually provide some sort of online option to stand up to the competition.
The Future:
Currently, it is unclear how Amazon will exactly use Whole Foods as the company did not release any further details. As for consumers, this purchase could increase competition between retailers and lead to lower prices on groceries as companies attempt to attract more customers and work towards gaining an edge in the market.
Many of the bottom tier retailers will more than likely have to close stores, or get sold to the larger companies as they will not be able to compete with the drop in prices. The Mom and Pop stores will slowly see a decrease in numbers, as companies like Amazon and Walmart only grow in size and work to obtain more of the market, keeping them ahead of the competition.
It can be expected in the future to see a price war in the grocer industry, and an increase in online business as Amazon's purchase has seemed to create a greater need for other companies to infiltrate this sector.
