I think it will definitely increase there grocery sales but the question is will it be enough to justify the cost of whole foods.

Amazon will be playing a long game and can afford to make losses for years if they see light at the end of the tunnel. Should also be remembered that in retail it is normal for some of your products to operate at a loss for example fruit and veg in a supermarket they sell it cheaply just to get people in the door and once they are in there they buy other more expensive things that have higher Mark ups. You could see Amazon doing something similar get people to come online daily to buy groceries and they will also pick up other high end items while they are there.