Amazon Rocks Grocery Store Market With Purchase Of Whole Foods

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", said Amazon co-founder and CEO Jeff Bezos in a statement.

Amazon will "use Whole Foods as a laboratory to try to completely transform the sector" of food distribution, so far still little invested in online commerce, said Volokhine. HBO's John Oliver did a savage skit about the company's high prices.

Small-company stocks fell more than the rest of the market.

Amazon announced Friday it would purchase struggling organic grocer Whole Foods for $13.7 billion, and with Whole Foods stock price falling since a peak in 2013, many are wondering how Amazon - and its record of innovation and technology - could save the once ascendant organic grocer. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains. And the key measure that retailers look at to gauge their health, revenue at stores open more than a year, has fallen for seven quarters in a row. Initially an internet bookshop, Amazon began delivering non-perishable food items like cereal and soup in 2006, prompting derision from the grocery industry.

Whole Foods, which will keep operating stores under its name, said in an email to customers, that it will maintain the same standards under Amazon, including bans on artificial flavors and colors and antibiotics in hens producing its eggs.

Amazon's acquisition of Whole Foods ranks as the 11th biggest global retail deal of all time and the fourth largest USA retail deal, according to Thomson Reuters. Four of the five biggest losses in the S&P 500 index in early trading were retailers: Kroger, Target, Costco and Wal-Mart Stores.

Target tumbled $4.65, or 8.4 percent, to $50.812. Target TGT has tumbled over 10% so far today, and wholsale giant Costco COST is also trading down nearly 7%. That was a trend Whole Foods helped start.

Supermarket chain Kroger, which plunged 19 percent Thursday after lowering its sales forecast, lost another $3.06, or 12.5 percent, to a three-year low of $21.48. Sprouts Farmers Market skidded $1.69, or 7.5 percent, to $20.74 and Supervalu sank 51 cents, or 13.6 percent, to $3.25.

Organic and specialty foods distributor United Natural Foods dropped $5.83, or 14.7 percent, to $33.92 and Sysco Foods fell $2.12, or 3.8 percent, to $53.41.

With this acquisition, Amazon is going to upset the food distribution landscape and further expands its empire, after launching into series production, food delivery, cloud computing and drones. General Mills dipped $1.83, or 3.1 percent, to $57. Both companies said there will be no layoffs, but did not respond to other questions about Amazon's plans for Whole Foods. The company said it is cooperating with the investigation and its own auditing hasn't turned up any major erroneous costs or problems. The yield on the 10-year Treasury note fell to 2.15 percent from 2.17 percent.

The other major players in the grocery retail field, which used to be seen as one of the most solid and unshakeable industries, have been scrambling to catch up. Hong Kong's Hang Seng rebounded 0.2 percent. Britain's FTSE 100 gained 0.5 percent.

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