Amazon Buys Whole Foods for $13.7B in Cash – Is this the end of brick and mortar grocery?

Amazon announced today that it will acquire Whole Foods for $13.7 billion in cash. Following this news Whole Foods was up almost 30%, a great day for shareholders of both Whole Foods and Amazon, but not so great for the rest of the retail grocery segment (Kroger is down about 9% today). The grocery segment is nothing new for Amazon – they have been selling a multitude of typical grocery items for a long time. What is new is their entrance into the specialty food segment of that market, which highlights the continuing encroachment of online retailers into what has been traditionally brick and mortar businesses. We have already seen Amazon and the like put companies like Borders, Barnes & Noble, and many of the retail clothing stores out to pasture. Others such as Radio Shack, Sears, Macy’s, Gymboree (recently filed for bankruptcy) and so many more have either failed or are on life support. While it is unclear whether or not Amazon can take Whole Foods to new heights, it is painfully clear that online retailers are killing traditional brick and mortar stores, and this trend is set in stone. In the near future, it is likely that we will no longer have the option of shopping in a physical store, and will be forced, whether we like it or not, to buy everything online. For cities like Santa Barbara that already face serious challenges with commercial real estate vacancies, this trend has serious economic implications that cannot be ignored.

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