Amazon swoops on groceries

For almost a decade Amazon has been dipping its toes into the choppy waters of grocery retailing. But on Friday the online giant created a cannon-ball splash with a stunning $13.7-billion (about R175-billion) swoop on US grocery chain Whole Foods.

The jaw-dropping move stunned retail pundits, and shares in retailers ranging from Tesco in the UK to Walmart in the US were pummelled. The dramatic deal confirmed what had long been feared: Amazon was going on the offensive on the turf of traditional supermarkets.

"For other grocers, this deal is potentially terrifying," explains Neil Saunders, managing director of consultancy GlobalData Retail.

"Although Amazon has been a looming threat to the grocery industry, the shadow it has cast has been pale and distant. That has now changed," he said.

Despite the naked ambition of Amazon's Jeff Bezos to launch a series of innovative products from drones to Kindles to voice ordering assistants, the takeover of Whole Foods is the company's biggest ever deal, dwarfing the $1-billion paid for online shoe retailer Zappos back in 2009.

The deal underlines the blurring between traditional and online retail and just how closely Amazon is watching its biggest rival, China's Alibaba, which recently said its "new retail" strategy will mean that shoppers can touch and test products in the shop then order them to arrive at their homes before they return from shopping.