"I think that this takes all of the pressure off Whole Foods and gives Whole Foods the opportunity to revitalize that business and, of course, it stems the criticism from all of these activist investors", said Neil Saunders, managing director of GlobalData Retail in NY. Last year, it opened two small stores in Seattle where drivers can seamlessly pick up produce without leaving their cars.
Pachter said that even if Amazon gets 20 million members of its Prime loyalty program to pay $15 a month extra for AmazonFresh grocery-delivery service, that's $20 million not going to traditional supermarkets. Amazon has a lot to look forward to with these physical stores owned by them now.
Amazon's move only adds to the pressure on Wal-Mart, as over time, the convenience and grocery delivery offered by the e-commerce giant would likely cut into Wal-Mart's sales, said Ken Perkins, president of research firm Retail Metrics. "This just gives them the ability to sell grocery items in a way no grocery store can do".
The organic grocer, which was founded in 1978, would continue to operate under its existing brand.
Amazon said Whole Foods stores will continue operating under that name as a separate unit of the company. Mackey will remain as CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin, Texas.
The deal is sure to put new pressure on Walmart, which has been aggressively expanding its online business in hopes of winning over consumers. This was announced by the company on Saturday.
■Supervalu: The grocery store operator lost 54 cents, or 14.4 percent, to $3.22.
The companies said they expect the transaction to close in the second half of 2017. "They're not really competitors".
For Amazon, the Whole Foods acquisition does more than just leapfrog over the technical difficulties it has had in implementing its grocery plans.
"They (Amazon) always try to offer the best price, which is good for the customer, but not good for the brand", Motkin said. It's Amazon's largest acquisition, after the company's purchase of Zappos in 2009 for around $1.2 billion.
What started as an online bookstore in 1994 has expanded into the fourth largest company in the world.