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Whole Foods gave Amazon a high-end, nationwide, yet arguably "mainstream" grocery store to enter into the US grocery market. It's an aspirational brand, yet not

Whole Foods gave Amazon a high-end, nationwide, yet arguably "mainstream" grocery store to enter into the US grocery market. It's an aspirational brand, yet not so specialty to be ostentatious. It's a nationwide chain, unlike other top-rated grocery stores -- Wegmans and Publix come to mind. And it's a store that, through savvy and market timing, has located its sites in areas that are experiencing growth in upper-middle-class households: Amazon's preferred demographic. They can likely cut Whole Foods' margins on many items and, through the magic of the warehouse club nature of Prime, offer further discounts to Prime members, incentivizing the choice of Amazon over their competitors. Not all people will we swayed, but some will. This will shake up the grocery market in many metros, where margins are tight and incumbents are often saddled with tight margins, concerns about real estate, and preexisting debt. Some will spend more to retain customers with extra features like free at-store pickup or cheap delivery, but they won't be able to outmatch Amazon's warchest. The most vulnerable among their competition will fold, allowing customer bases to re-align.

Shivetya 9y ago
There aren't enough of these stores to impact any major metro area. Aldi tends to have more storefronts and their impact hasn't been that great. What did smack the old school grocers was when Wal Mart got into the business years ago and to a point Target. example, there less than ten Whole Foods stores in Metropolitan Atlanta. There are probably that many competing grocery chains in the same area, with sixty plus of each of the larger ones.
- Whiteskin_Kanye 9y ago
  In Detroit, a "food desert", they could potentially take over the majority of the downtown/midtown upper middle class grocery market.
e_b 9y ago
Amazon can't reduce margins without fundamentally changing the nature of Whole Foods. If they lower margins they will leave their current segment and enter a lower cost segment, with the corresponding changes in service, offerings and overall customer experience. They could do it by subsidizing lower margins in the short but not the long term.
gowld 9y ago
At $100/yr, which includes video and app subscriptions, and shipping, Amazon can't offer too much in the way of discounts before the warehouse-club aspect is irrelevant and is just "competing on price"

Shivetya 9y ago

There aren't enough of these stores to impact any major metro area. Aldi tends to have more storefronts and their impact hasn't been that great. What did smack the old school grocers was when Wal Mart got into the business years ago and to a point Target. example, there less than ten Whole Foods stores in Metropolitan Atlanta. There are probably that many competing grocery chains in the same area, with sixty plus of each of the larger ones.

Whiteskin_Kanye 9y ago
In Detroit, a "food desert", they could potentially take over the majority of the downtown/midtown upper middle class grocery market.

e_b 9y ago

Amazon can't reduce margins without fundamentally changing the nature of Whole Foods. If they lower margins they will leave their current segment and enter a lower cost segment, with the corresponding changes in service, offerings and overall customer experience. They could do it by subsidizing lower margins in the short but not the long term.

gowld 9y ago

At $100/yr, which includes video and app subscriptions, and shipping, Amazon can't offer too much in the way of discounts before the warehouse-club aspect is irrelevant and is just "competing on price"