Shares of Amazon have risen 34.4% in the past year, while Whole Foods shares were up 7.3% for the year (about 10% below the performance of the S&P 500) before skyrocketing when the deal was announced on Friday.
"The conventional grocery store should feel threatened and incapable of responding", Pachter said. "I'm a little baffled by this", said an analyst in 2006.
Amazon'smarket share of the US retail sector previous year was estimated at 34 percent, while Walmart came second with 5 percent, according to Needham & Company's research in April. On Friday, WalMart announced it is buying men's online clothing retailer Bonobos for $310 million.
Amazon. Investors like the deal and think it will be good for the online retail giant, which has been expanding its grocery offerings. John Mackey, Whole Foods' outspoken co-founder, will remain as the CEO of Whole Foods, a position that gives him a victory after his battle with activist investor Jana Partners, who threatened to topple his position in the company. Groceries are already a fiercely competitive business, with low-priced rivals like Aldi putting pressure on traditional supermarket chains and another discounter, Lidl, opening its first US stores just this week.
Both Whole Foods and Amazon'sstock shares have risen since the announcement of the deal. Wal-Mart slumped 5 percent.
Mackey has referred to Whole Foods as his "baby". Shoppers skip the checkout line, and their Amazon accounts get automatically charged.
"Whole Foods shareholders will only receive $42.00 per Whole Foods share owned". However, Whole Foods does not have access to Instacart's financial numbers and analytics.
Paul Cautracecasas, the chief executive of Aquaa Partners, told The Washington Post that Amazon is "dominating all aspects of retail". Stock for Whole Foods Market went up by 28 percent. According to multiple reports, Whole Foodsalso invested in Instacart. Spokesperson Mike Berman said Amazon's deep pockets might create more opportunities to invest throughout the region.
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.
The deal will see Amazon in hundreds of physical stores across the country as it fulfills the e-commerce company's goal of selling more groceries to the public. The Seattle-based company was recently granted a patent for technology that would block shoppers from comparing prices from their mobile devices while they're in stores.
Most Whole Foods locations in Canada are concentrated in the Greater Toronto Area and B.C.'s Lower Mainland. The company is mulling the possibility of introducing home delivery.
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