Which is heard ’round the world retail shot. When Amazon.com (AMZN symbol) announced the acquisition price of upscale grocer Whole Foods Market (WFM) was $ 13.7 billion, up investors in everything from warehouse clubs, grocery chain pharmacies escape escape.
Fair enough. no one wants to compete with Amazon. America’s largest e-commerce company has developed voracious appetite, and has proved willing to give up the pursuit of its profits. As a result, Amazon has put relentless pressure on retailers to sell everything from clothing to electronics.
Now is to transform the grocery business. the entire industry stock prices fell after the transaction announced in June , 16 pharmacies even if investors very nervous. If Amazon’s move into brick-and-mortar retail to the company violated its own market, but also a landing?
Perceived victim of Amazon’s stock continued to struggle from through July 5 the closing date of June 15, the smart department stores and finals (SFS) shares plunged 23%, SUPERVALU (SVU) fell 14%, Kroger (KR), which has also been disappointing quarterly results hit Down 5%. Wal-Mart Stores (WMT), which derive more than half of its sales come from groceries, down 5.4%. As for the two retailers Kipling has written about recently, Costco (COST) fell by 12% but health CVS (CVS) fell by only 0.5%, as investors quickly realized that the company, which has a huge pharmacy benefit business, is more than drugstore chain.
When the sector indiscriminately sell out, bargaining is often realized. challenges in the grocery aisles looking for iNG shares is successful, food prices have been falling. when this happens, it is not profitable to sell groceries in Fort Pitt capital Group Kim Forrest, senior analyst, said long-term decline in food prices of all these stocks picks tricky, at least at the current price. she recommended not to buy a stake in rival Whole foods in. “it is too early, unless they have a ‘magic’ formula to overcome deflation is everywhere to go there in the grocery store business. “In addition, she said, behind the Amazon is only one factor in food prices.” Liddell and discount grocery store Aldi expansion should be about, “said FuLester added. “This is a big shareholder for consumers, not so great.”
In this context, the company has a low price released their DNA is more advantageous position than others, analysts said. Take Costco, for example. Analyst at Cowen and Company, said, warehouse clubs have proven themselves adept at handling the food price deflation in its existence. It already knows how low prices and so-called loss leaders, such as discounted gasoline to thrive. In addition, its business model beyond just selling groceries. It stems from most of its operating profit from membership fees. In addition, part of its appeal is that you can stumble on a discount, through the store, which is called the impact “treasure hunt” walk.
Costco’s sales in June showed that almost no trouble. Sales in stores open at least a year are far ahead of what investors expect. Costco membership base d model also shows its strength. Not to scare away new customers, $ 5 increase membership fee is $ 60 a year filled the company’s bottom line. “While many retailers are facing pressure from the growing online retail, Costco’s latest achievements in helping its members to serve as a model for how powerful together, remind” UBS (UBS) analyst said.
Wal-Mart is also worth a closer look. The world’s largest retailer in the United States 4700 stores, Wal-Mart has almost been in a passive Amazon to lure their customers. In January, the retailer eliminates the free two-day shipping $ 49 membership fee and cut the minimum order for free shipping from $ 50 to $ 35. In the Amazon, customers need to register for the Amazon, a year and costs $ 99 to get free two-day shipping.
Meanw often trivial, Amazon is expected to turn the Whole Foods store to 466 distribution points, and there is no reason to Wal-Mart is not possible in a similar manner using its own stores. Cowen said the United States about 90% of the population lives with 10 miles Wal-Mart stores. At the same time, the company has established priorities for e-commerce business. As already in place, real estate, Wal-Mart can also sell groceries online and deliver them to the customer’s door. And, of course, Wal-Mart’s slogan is “everyday low prices.”