The Effects Of Amazon-Whole Foods Deal Will Be Wide Spanning; Grocers Already Taking A Big Hit

Amazon.com, Inc. AMZN’s acquisition of Whole Foods Market, Inc. WFM isn’t just a change-in-hands of grocery assets. It’s a critical play in distribution centers.

“I think this shows they’re rapidly expanding Prime Fresh and can deliver through 400-plus distribution points instead of through 20-plus now,” Wedbush analyst Michael Pachter told Benzinga. “They can figure out last-mile logistics, but they step up their distribution capability to within one hour of probably 75 – 85 percent of households with this move. This shows that they are serious about grocery as a category, and WFM has good distribution capability.”

Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.

— Dennis K. Berman (@dkberman) June 16, 2017

The effects on publicly traded companies are widespread, and the market immediately reacted to the news with hits to grocery peers.

• Wal-Mart Stores Inc WMT fell 5.7 percent.
• Kroger Co KR fell 12 percent.
• Sprouts Farmers Market Inc SFM fell 13.2 percent.
• Costco Wholesale Corporation COST fell 7 percent.
• Target Corporation TGT fell 12 percent.
• United Natural Foods, Inc. UNFI fell 21.8 percent.
• SUPERVALU INC. SVU fell 19.4 percent.
• SpartanNash Co SPTN fell 5.1 percent.