Markets Right Now: Grocer stocks plunge on Whole Foods deal

Pedestrians walk past a Whole Foods supermarket.

Whole Grocer, which was founded in 1978, would continue to operate under its existing brand. Grocery chain stocks plunged on Friday because of the news in the tough retail food industry.

Amazon on Friday announced it will acquire grocery chain Whole Foods Market Inc.in a $13.7 billion deal.

"I think short-investors thought Whole Foods would just be a casualty of Amazon's food retail expansion and then be bought on the cheap", said Dusaniwsky. Mackey will remain as CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin, Texas.

"As consumers want to be able to shop with flexibility - sometimes online, sometimes in-store - and expect the experience to be seamless regardless of the channel they choose, this new deal caters to that need, marrying Amazon's online expertise with Whole Foods' physical presence". Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods.

Amazon has been a retail giant that's pioneered online services such as 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo and Alexa.

Grocery giant Kroger said Thursday that its profits for the year would be lower than Wall Street expected, sending its stock plunging almost 20%.

"This is going to be their "wow" moment that says, 'We got to get into this really quick before Amazon takes over all these Whole Foods stores'".

The deal is expected to finish later this year, if Amazon's shareholders approve it. Bezos added, "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an awesome job and we want that to continue". However, it's the only one released so far, although Amazon has said it plans to open more in the future. "This makes them a major player in grocery and just adds more pressure on Wal-Mart, Target and Costco to not continue to lose share", he told CBS MoneyWatch. The store uses sensors to track items as shoppers put them into baskets or return them to the shelf.

Small-company stocks fell more than the rest of the market. According to CNBC, Investors have already begun speculating that with shares trading around the offer price, this could mean that another suitor will still try and make a play for the chain, CNBC stated. The e-commerce leader's stock popped another 4% on Friday, lifting its market value to an incredible $477 billion.

Ripple effect: If 20 million Amazon Prime members agree to pay $15 a month extra for AmazonFresh grocery-delivery service, that's 20 million customers traditional supermarkets lose, said Moody's lead retail analyst Charlie O'Shea.

  • Zachary Reyes