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Amazon takes on grocery market

Retailer's move into the supermarket sector could be bad news for the opposition
Amazon takes on grocery market

Any thoughts that Amazon 's (US:AMZN) reach across new sectors would one day slow were unceremoniously kicked into touch by the news of its acquisition of US grocery chain Whole Foods for around $13.7bn (£11bn). So, having decimated the booksellers, music CDs and DVD outlets, it looks as though Amazon's founder and chief executive Jeff Bezos has pressed the start button for entering the supermarket sector.

IC TIP: Hold at $992

For Amazon, the initial bonus is the acquisition of a string of quality outlets in affluent locations. The timing is perfect because the Whole Foods business model - organic and expensive food - was preventing it reaching a bigger market share, and in order to do so, it launched Whole Foods 365, effectively offering a cheaper price range. The point here is that with Amazon's lower cost supply chain, Whole Foods could find itself in the position of undercutting some of the really big operators such as Costco, Target and Wal-Mart. Shares in these US-listed companies dipped on news of the deal.

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