It hit just before 2pm US eastern time on an otherwise calm Thursday (Aug. 24) afternoon. Amazon announced plans to roll out lower prices at Whole Foods Market locations, and it sent the supermarket chains into a tailspin. This is what losing close to $12 billion in market capitalization looked like for America’s grocery industry:
Kroger was hit hardest—nearly 8%—costing the 134-year-old chain just under $2 billion in market value. Costco tumbled by 5% and Walmart nearly 2%. It was a combined grocery industry shudder as retailers were forced to finally face the existential questions they’ve long seen coming: How will consumers shop for food in the future? Will it increasingly migrate online, or will brick-and-mortar stores continue to dominate?
This week—after its $13.7 billion Whole Foods acquisition was approved by US regulators—Amazon detailed the rudimentary first steps it would take to try and define that future:
- Offer lower prices
- Bring Whole Foods services and perks into the orbit of its popular Amazon Prime service
- Park new Amazon-branded lockers in Whole Foods stores so customers can pick up online orders
These moves show the Silicon Valley behemoth is eager to nudge grocery shopping into a new digital era and beyond. How its established grocery industry competitors will respond remains to be seen. But if they have learned anything from watching Amazon disrupt the general goods and publishing industries, they know complacency won’t be an option.