Amazon's (AMZN  ) purchase of Whole Foods (WFM  ), an announcement that sent shockwaves throughout the American retail market, is causing many to wonder what the future of retail is going to be. Along with Wal-mart's (WMT  ) 2016 acquisition of the e-commerce website Jet.com, smaller retailers are finding themselves in a new market dominated by online retail. With the recently announced acquisitions of retail heavy weights like Amazon and Wal-mart, their future is becoming more uncertain.

In the retail market, the shift from brick-and-mortar stores to e-commerce has defined the past few years of commerce. This fact is supported by the recent closings of physical retail stores and declining job opportunities for employees in the recent years alone. While retail stores are beginning to close, e-commerce is rising rapidly. Given Amazon's strong foothold on the online retail market, Wal-Mart is pushing back with it's recent acquisition of the e-commerce apparel company Bonobos for $310 million. Set to run under Jet.com, Bonobos will provide Wal-mart with the tools needed to provide more premium clothing, along with other products by brands that are not available on Amazon. Battling this head-on, Amazon recently announced it's decision to offer Prime Wardrobe, a new feature that will be exclusive to Prime members. In this feature, Amazon will allow their customers to try on from more than 1 million pieces of clothing, and return them for free. In doing so, customers would also be able to gain discounts with the more clothing that they keep.

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With all these new developments, where does this leave other traditional retailers like Costco (COST  )? According to research, probably not a good place - with the announcements of Amazon's purchase of Whole Foods, Costco's stock price immediately fell more than 10%. In addition, the overlap between Costco members and Amazon Prime members was found to be significant, with 45% of Costco members also Prime members. As if that wasn't enough, Costco's e-commerce revenue saw an 11% increase while Wal-Mart had a 63% increase in online retail revenue. The answer for Costco, and other retailers like it, would be to focus on e-commerce. Goldman Sachs analyst Matt Fassler extends this argument, stating that "increased expansion by [Amazon] and online investment by [Wal-Mart] create an imperative for [Costco] to intensify its own investment in e-commerce."

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While the future for Costco appears to be murky, the retailer has a fairly strong track record. In 2016 alone, Costco had a revenue of $119 billion, while Amazon had a revenue of $166 billion with a difference of only $17 billion between the two. In addition, Costco has been adding locations with an average of 25 new stores since 2012, while other retailers have been decreasing their locations or completely shutting down altogether. Although the retail market is beginning to change rapidly, it will be up to Costco and other stores like it to get a stronger hold on the online market and increase their presence in shipping. When that is done, maybe then the fierce battle between Amazon and Wal-mart will include Costco as well.