The clamor about the Amazon and Whole Foods tie-up has quieted down now that the transaction has closed, but the story continues as analysts look at how the two will complement each other. It may seem strange that an e-commerce giant that operates on razor-thin margins would acquire a high-end grocery store operator that specializes in organic food.

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However, the Amazon and Whole Foods merger looks like an early signal of what’s becoming a trend among brick-and-mortar chains. In fact, investors are so convinced that the combination have short-sellers scrambling to borrow shares of Kroger, and the market looks poised for a face-off between Amazon and Walmart.

Amazon and Whole Foods to boost Prime subs

Amazon kicked off its first day as the high-end grocery store chain’s new owner by slashing its prices earlier this month. Data from Foursquare indicated that foot traffic at Whole Foods stores increased by as much as 25% after the price cuts. It remains to be seen whether this uptick will be sustained, but analysts generally expect both Amazon and Whole Foods to benefit from the merger.

For example, Morgan Stanley analyst Brian Nowak said in a note late last week that he projects a compound annual growth rate of 12% for Whole Foods alone between this year and 2022, assuming a 3% share of the U.S. grocery market. He believes the grocery store chain’s growth will come from growth in new shoppers due to more competitive pricing and greater convenience. He cited his firm’s AlphaWise data, which revealed that only 13 million households shopped at Whole Foods before the merger, and those that didn’t said price was the biggest barrier.

Nowak expects the Amazon and Whole Foods combination to also result in growth for Amazon Prime as more members shop at Whole Foods and new Prime-only promotions at Whole Foods convince more shoppers to sign up.

Brick-and-mortar chains join Amazon since they can’t beat it

The Amazon and Whole Foods tie-up could be just the tip of the iceberg in terms of the online retailer’s plans for physical locations. Citing an unnamed source, CNBC reports that Amazon is keen to grow its physical presence because it has observed an uptick in online sales in areas where it has a physical location. Thus, it seems that its brick-and-mortar locations are fueling its online sales in addition to adding their own sales.

And brick-and-mortar stores are more than willing to strike a deal with the e-commerce giant. Many see Amazon as a threat, which is apparent in the deal Kohl’s has struck with the e-commerce giant. On Tuesday, the two companies announced that Amazon shoppers can return items to some Kohl’s stores in the U.S. rather than sending them back to the online retailer.

Amazon is also being blamed by many for Toys R Us’ bankruptcy filing, which was announced on Monday, the same day short interest in Kroger reached a new record high. The Amazon and Whole Foods merger is already threatening other grocery store chains, as JPMorgan found that the merged company’s price cuts brought Whole Foods’ prices down to the same level as those at other store chains.

Amazon and Whole Foods inflate Kroger shorts

For example, after comparing prices on a number of natural and organic products after the price cut, JPMorgan analysts found that Kroger’s Ralphs in Los Angeles was only 4% cheaper than Whole Foods for their basket of items. However, on foods that were advertised as being on sale, Ralphs’ prices were 4% higher than Whole Foods’, while before the price cut, Ralphs was 20% less expensive than Whole Foods.

Short-sellers quickly started looking for ways to capitalize on this early sign of pricing threats from Whole Foods by shorting Kroger. Financial analytics firm S3 Partners reported on Monday that short interest in the grocery store operator was at an all-time high and still rising. Research head Ihor Dusaniwsky said that total short interest in Kroger was up 151% year to date, at $1.43 billion with 66.4 million shares sold short, a 301% increase since the beginning of the year.

There was still room for short-sellers to take positions in Kroger, as only 7.5% of the float was being borrowed, leaving a massive pool of available shares to borrow.