Amazon buying Whole Foods, making strong move into groceries

Stocks dip as Amazon-Whole Foods deal hammers grocery stores

"They (Amazon) always try to offer the best price, which is good for the customer, but not good for the brand", Motkin said.

Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the US - a brand-new laboratory for radical retail experiments that could revolutionize the way people buy groceries. It already operates AmazonFresh delivery service, and has indicated plans to launch in-store pick-up at Whole Foods.

Online retailer Amazon AMZN, +2.44% announced Friday it is buying the grocery store chain Whole Foods WFM, +29.10% for $13.7 billion, tanking grocery stocks and making Amazon's chief executive Jeff Bezos some $2.75 billion richer.

[RELATED: Join us at Microsoft, and learn tactics and strategies to conquer all your biggest communications challenges.]Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades-they're doing an incredible job and we want that to continue.

INSKEEP: That's NPR's Yuki Noguchi on news that Amazon is buying Whole Foods.

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Amazon also has been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.

Small-company stocks fell more than the rest of the market. Walmart, the world's biggest retailer that generates more than half of its revenue from groceries, lost more than $11 billion in market value. Whole Foods will keep its brand and John Mackey, its current CEO, will remain in place. Amazon has entered into a definitive merger agreement with Whole Foods over the acquisition though, so the sale is mostly a done deal.

Whole Foods' stock was halted.

The supermarket business, like many other parts of retail, has been hit hard by increased competition from Amazon itself, as well as Walmart. And it shakes up a US grocery industry that has been struggling to keep up with growing competition, both in stores and online. Whole Foods Market, which has more than 420 stores in more than 40 states in the USA, soared more than 29.1% to $42.68.

The acquisition, expected to close this year, is more than 10 times larger than what Amazon spent on its next-biggest deal, the purchase of online shoe retailer Zappos in 2009.

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