Shares in US retailers took a hammering after online giant Amazon’s decision to buy the trendy grocery chain Whole Foods Market.
The $13.7 billion (£10.7bn) cash deal takes Amazon into the bricks and mortar supermarkets business and left many other retailers worrying how it might impact on them.
Investors were caught by surprise and ahead of the opening on Wall Street, Walmart shares were marked down 4%. Kroger – the biggest retailer by store numbers – dived 12%.
Shares fell further a few minutes into trading. Kroger was down 14.5%, Sprouts Farmers Markets fell 13% and Supervalu slid 19%. Wal-Mart was 6% down. Shares in Whole Foods soared 28% on the announcement.
The deal also impacted on UK retail stocks. Tesco was down 3.6% and Sainsbury’s 2.4%.
Whole Foods has 400 stores. There are nine in Britain including one in Giffnock, Glasgow, which opened just over five years ago.
One New York analyst said: “Whole Foods stores could soon become distribution centres for Prime Now or Amazon Fresh, increasing the e-commerce giant’s grocery reach to 400+ stores nationwide by the end of the year.
“It will also increase Amazon’s selection of healthy and organic food for their online marketplace and possibly incentivize their 80+ million members to shop at Whole Foods, strengthening both businesses in the long term.”
Explaining the reason for the move, Jeff Bezos, Amazon’s chief executive, said: “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy.
“Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”
Whole Foods Market will continue to operate stores under the brand “and source from trusted vendors and partners around the world”, said a statement.
Founded in 1978 in Austin, Texas, Whole Foods Market calls itself the leading natural and organic foods supermarket.