Amazon's grocery push playing catch up with Chinese e-commerce giants

Posted June 23, 2017

"The possible effects on Whole Foods alone are interesting to contemplate", Mr. Maute said. A union could boost the ambitions of both. Should stores be laid out more like warehouses, to optimise for online delivery?

The $13.4 billion purchase of Whole Foods by Amazon nearly certainly compounds the anxiety felt by companies that rely on traditional brick-and-mortar retail models. While the company is now experimenting with the way it displays ads and its impact on customer experience, the analyst believes that advertising is likely to remain a potential revenue driver going forward. Amazon is already a major player in the clothing and electronic markets.

"What this points to is the potential of the e-Commerce grocery channel in the US", said Stewart Samuel, Program Director at food and consumer goods research organization IGD in an interview with Retail TouchPoints. Whole Foods is fighting to broaden its appeal while preserving its reputation on quality. The company is likely to squeeze makers of packaged goods - from canned soup to cleaning products - to help make lower prices part of their competitive edge.

Investors are grossly overestimating the impact to Walmart of Amazon's bid for Whole Foods, according to Moody's.

Amazon, in instantly acquiring a stable of its own grocery staples such as pizza sauce and peanut butter, could decide to give them favored placement in its search results.

However, Meyer is interested in seeing whether Amazon, through its ownership of Whole Foods, can find a way to use its distribution system to deliver perishables like cottage cheese. Many also say they will always want to do some of their grocery shopping in person to see what they're buying.

Yet if there's one thing to learn about Jeff Bezos, Amazon's founder and chief executive, after years of watching Amazon, it's that he doesn't spend a lot of time predicting future possibilities. Whole Foods, a leader in redefining the modern grocery experience, offers a "produce butcher" at a recently opened store in New York City.

Like most other members of my Frightful Five collection of indomitable tech giants - Amazon, Apple, Microsoft, Facebook and Alphabet, Google's parent company - Amazon has experienced a huge growth in its stock market value over the past couple years. He said he expects Amazon will eventually reconfigure Whole Foods stores, and landlords and developers will have to adapt. The company has a reputation of treating its workers well - offering perks such as 20% discounts on produce and a low-priced healthcare plan. Still, it's an example of how the checkout might get easier down the road.

In this light, the Whole Foods deal starts less with a strategic end-goal and more with this insight: Shopping for food is broken.

And in turn, the company could revive its recently stalled ambitions to expand to 1,200 USA stores.

Whole Foods has struggled in recent years with declining sales at established stores and increasing competition from big grocery chains across the country that have recognized the demand from consumers and are offering more natural and organic foods. Perhaps most worrisome for Target is that its customers are also fans of Whole Foods and Amazon. Walmart, the nation's biggest grocer, reported about $200 billion in grocery sales in 2016, or almost one-third of all grocery sales revenue, compared to $15.7 billion for Whole Foods, CBRE says. While Forrest doesn't shop exclusively at Whole Foods, he said he makes it a point to get items like vegetables and meats from the chain. If Whole Foods becomes more competitive on price and can serve a larger geographic area due to Amazon's delivery logistics experience and technology, then those retailers will lose share.

While Amazon recently tried to woo Wal-Mart's lower-income shoppers with discounts on its Prime membership, it will probably find it hard to make inroads among Wal-Mart's core customers.

SELYUKH: Rich Tarrant is the CEO of MyWebGrocer, a company that helps grocery stores sell products online.

Amazon will have to build public trust and interest in drone technology, he added. Whole Foods stock was basically flat over the past few days, and last seen at $43.01 on Friday. When you look at the total inventory in the chain, it's highly inefficient today.