How the Amazon-Whole Foods Deal Could Crush Rival Grocers

ISSAQUAH, WA - When Seattle-based tech giant Amazon completed a mega-deal to buy high-end grocer Whole Foods, it sent shockwaves through the industry. Amazon quickly followed through on its promise to slash the grocer's prices and will list many of Whole Foods products on its site. The combined power of the two businesses is expected to hurt competitors' business.

The Federal Trade Commission approved the deal Aug. 23. After purchasing Whole Foods for $13.7 billion, Amazon promptly slashed the store's prices by an estimated 43 percent with the stated goal of making "natural and organic food affordable for everyone." Whole Foods has already lowered prices on everything from avocados to organic rotisserie chickens.

This would appear to be good news for consumers, but industry players are worried about the effects on competition. Companies like Issaquah-based Costco and Boise-based Albertsons Companies, which owns Safeway, may not be able to compete.

Also See: Amazon To Slash Prices At Whole Foods; Competitors Are Scared

Costco shares have plummeted 16 percent since June. But the discount store's sales have been strong in 2017: adjusted comp sales were higher than the previous year by 4.5 percent in May, 6.5 percent in June and 5.3 perent in July.

Bond prices for Albertsons, The Fresh Market and Walmart all dropped following the news. Kroger's stock price remained steady, but had already decreased by 37 percent this year.

In the end the Amazon-Whole Foods deal could mean more money in your pocket. Competitors are expected to adjust their pricing strategies, which could lead to across-the-board price cuts.

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