Amazon vs. Walmart: Grocery Wars

walmart

Amazon lowered the boom on Walmart (NYSE:WMT). As the discount retailer announced plans to acquire Bonobos Friday—a men’s clothing company for $310 million, Amazon said it plans to buy Whole Foods (NYSE:WFM) for $13.7 billion.

Walmart shares finished the session 3% lower, a sign investors are betting Amazon’s e-commerce strategy will continue to dominate the industry, its shares jumped over 2%.

Amazon’s bet on the organic grocer will help the company better compete against Walmart—which is currently the leading grocer —beating out competitors like Safeway and Kroger (NYSE:KR)—according to a 2015 Consumer Report that says the retailer captures about 25% of the grocery market in the U.S., up from around 7% in 2002.

Ticker Security Last Change Change %
KR THE KROGER CO. 48.56 +0.18 +0.37%
COST COSTCO WHOLESALE CORP. 747.96 +3.25 +0.44%
WMT WALMART INC. 59.62 +0.04 +0.08%
TGT TARGET CORP. 151.49 -0.53 -0.35%

On Thursday, Kroger shares had the biggest percentage drop, 24.6%, since 1999. The chain posted its second-straight quarter of same-store sales declines and lowered its 2017 guidance. Additionally, both Walmart and Amazon are experimenting with drive-up grocery stores models.

In May, Amazon opened up two test locations in Seattle, which will allow Amazon Prime subscribers to place a grocery order online and then pick-up at a drive through window.

Walmart announced similar plans last week with a plan to test an automated grocery kiosk at a store location in Oklahoma City. The concept will allow customers to order groceries thru their app and pickup it up at a location using a special code.

As Amazon targets Walmart’s grocery arm, Walmart has been doing the same by ramping up its overall e-commerce push. Along with today’s deal, it recently acquired apparel retailers Moosejaw and Modcloth. Last August, it paid $3 billion for consumer products retailer Jet.com.