Amazon deal rocks retail sector

However, it could end up being a bad thing if one company monopolizes the market.

Inc. said yesterday it plans to buy struggling natural and organic food pioneer Whole Foods Market Inc.in a $13.7 billion deal that would give the e-commerce giant 430-plus brick-and-mortar stores to distribute fresh food and other groceries.

The move sets the stage for new retail experiments that could revolutionise how people buy groceries and other goods.

The top 10 grocery retailers plus Amazon control less than half of the market, Blackledge says, and a patchwork of several hundred grocery chains, convenience stores, dollars stores as well as mom and pop stores make up the remainder.

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.

Amazon is already nearly dominating retail - the company's market share of the USA retail sector previous year was estimated at 34 percent, while Walmart came second with 5 percent, according to Needham & Company's research in April.

The Amazon Go pilot store allows customers to choose items and then pay the bill automatically by just walking out of the store, all without going to a cash register. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer", said Bankrate.com senior economic analyst Mark Hamrick. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too. Certainly, it would appear to Cantillon that Bezos sees the future as slightly more nuanced than the vista of couch-bound online shoppers ordering everything from fast food to films online. Amazon shares climbed 2.4 percent to close at $987.71. To put the Whole Foods purchase price into some kind of context: Sainsbury's is now valued at £5.5bn and has over 1400 United Kingdom stores.

And this headline from Business Insider helps explain it: Amazon is acquiring Whole Foods - and Walmart, Target, and Kroger should be terrified. The store uses sensors to track items as shoppers put them into baskets or return them to the shelf. Whole Foods doesn't have a similar footprint but it is popular in this more affluent areas that Amazon likes.

Following a decline in sales, Mackey has been under pressure from activist investors lately to either restructure or sell itself after his longstanding co-CEO who was more involved with daily operations stepped down. The technology, however, could free up employees to talk to customers about products, the same as in the company's brick-and-mortar bookstores, he says.

  • Zachary Reyes