Amazon.com Inc.’s $13.7 billion bid for Whole Foods Market Inc. sent shock waves across the retail industry: Investors and rivals suddenly had to ponder how quickly the dominant online merchant might turbocharge a struggling chain, known for pricey hand-butchered meats and $30 emu eggs, to challenge U.S. supermarket leader Wal-Mart Stores Inc. But a bigger uncertainty surrounds a retailer not involved in the deal: Target Corp. The No. 2 U.S. discounter has been losing shoppers despite an expanded food offering that includes more fresh produce, gluten-free and organic products, and grab-and-go items. Now Target will likely face a reenergized Whole Foods that’s backed by a deep-pocketed parent-to-be already challenging the company in apparel and beauty products.
Amazon’s march into brick-and-mortar groceries comes just as Target embarks on a three-year, $7 billion turnaround plan that includes slashing prices, refurbishing more than 600 stores, and opening more than 100 smaller outlets in cities and on college campuses. Food is supposed to be an integral part of the stores’ redesign, which Chief Executive Officer Brian Cornell unveiled in February after the retailer’s worst holiday season in several years.