Amazon jumping into the grocery business

Online giant to buy Whole Foods chain

Pittsburgh Post-Gazette

After dominating the online marketplace for years, Amazon began to dabble in bricks-and-mortar stores — a bookstore here, an automated grocery store there. But the Seattle online giant’s announcement Friday that it will pay $13.7 billion to snap up high-end grocery chain Whole Foods marks a decisive move into the conventional store space.

Of course, just how long the word “conventional” can be applied to how people shop remains to be seen.

The retail landscape is shifting rapidly in the wake of changing consumer preferences and virtual shopping carts. And grocery shopping, which has yet to find a home online in the same way that books and clothes have, is in upheaval.

Whole Foods — known for its upscale, organic and specialty products — had been struggling as more competitors added organic food to their shelves. Meanwhile, traditional grocers — already dealing with persistently low food prices — have been bracing for incursions by deep discounters as two German companies, Aldi and Lidl, expand in the U.S.

“[Grocery chains] are lowering prices in anticipation of hard discounters moving in, and that threat is forcing price competition,” said John Brick, equity analyst for Morningstar Equity Research.

Against that backdrop,