In August this year, Amazon completed the $13.7 Billion acquisition of Whole Foods, and this event has brought significant effects to the major US supermarkets. After the acquisition, Amazon said that it would cut the prices at Whole Foods, causing stock prices at major US retailers to decrease. Furthermore, Amazon announced in a statement, “Whole Food Market will offer lower prices starting Monday on selection of best-selling grocery staples across its stores, with more to come.” This announcement caused the market value of the leading groceries to be wiped out by more than $11 Billion. These price-cutting actions by Whole Foods may also result in a price war in the grocery industry that will bring down the profit margins further. (Badkar …show more content…
Shares in Kroger fell 6.8 percent to $21.40 and shares in Sprouts Farmer dropped 5.2 percent to $22.61. Moreover, shares in Supervalu also dropped by 5.1 percent to $20.72 and Ingles Markets’ shares decreased by 2.8 percent to $23.33. Target’s share price decreased 3.7 percent and Costco fell by 4 percent to $152.96. Walmart, the biggest grocery retailer in US also declined 2 percent to $78.31 even though the company is seen “to have deep enough of a pocket to withstand a price war.” (Badkar & Kwan Yuk, 2017)
In a separate article, financial times’ journalist Anna Nicolaou found that the US food prices recorded their first annual drop in almost 50 years in 2016. This is mainly caused by the lower oil and grain prices, and further affected by the aggressive discounting by supermarkets. (Nicolaou, 2017) She also reported that $40 Billion in market value has been erased from the grocers in US and Europe as “investors contemplated a deepening price war in an industry grappling with historic food deflation, falling revenues, and pressure on already thin
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Selling its convenience stores would help Kroger to raise cash to finance the purchase of new assets, fund its digital plans as well as further price cuts. In its statement to investors, Kroger stated “considering the current premium multiples for convenience stores, we feel it is our obligations as a management team to undertake this review.” After the announcement, the shares in Kroger increase more than 5
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
“Attention Whole Foods Shoppers” is an essay written by Robert Paarlberg for the May/June 2010 edition of Foreign Policy magazine. Foreign Policy was originally founded in 1970 with the intention of providing views on American foreign policy during the Vietnam war and does more or less of the same today. Paarlberg’s purpose in this essay is to convince an educated western audience that the Green Revolution was not a failure and improved life everywhere it took place, organic food having advantages over non-organic food is a myth, and the solution to food disparity is investing into agriculture modernization. With logos as the main mode of appeal, Paarlberg’s organization effectively sets up his points throughout the essay with consistently
The food market business is usually a difficult one, but online retailer Amazon's proceeding to purchase high-end chain Whole Foods changed the landscape. The new corporation is currently reducing prices, as well as Amazon is managing to reduce costs by taking its online expertise
A counter argument to the conclusion that we should not trust nor buy from our food industries could be the obvious reason that food is cheaper than ever before. When times are hard in America, we can always count on the cheap price of our fast food restaurants and their dollar menus. However, these cheap prices come at a high cost. The reason meat or grains, for example, are so cheap, is due to subsidizing the market. While this may be great for consumers, it is actually incredibly harmful to local farmers. Artificially driving down the prices
What’s the difference between a Walmart and a farmers’ market? What causes these differences? And, what are we more partial to? Tracie McMillan delves into the intricacies and complications of our nation’s food industry in The American Way of Eating. Specifically, as McMillan integrates herself into the farming and grocer/selling aspect of the industry, it is evident the food system has been extremely successful in offering ‘abundance, accessibility, and affordability’ to its consumers.
Since 1996, when Amazon.com was incorporated it has never offered dividends to its shareholders (Nasdaq, 2015). The company’s dividend policy is not to pay dividends so that it is reinvested by seeking out opportunities and developing new products (Reeves, 2012, p. 17). In addition, the company’s net income has been fluctuating since 2004. According to Market watch (2015), the company’s net income in 2010 was US$1.15 billion, it reduced to US$ 631 million in 2011, it reduced further to US$ 39 million in 2012 before increasing to US$ 274 million in 2013. In 2014 the company’s net income reduced to US$ 241 million. The fluctuations in net income arise from strategic investments that have long-term returns. Stewart, (2014), notes that the high prices of Amazon.com’s shares are due to investors’ positive outlook about the company’s profitability in future. In this regard, the long-term bets have paid off the company resulting to investor confidence. Amazon 's net income for the three months ending in June 2015 was $92 Mil. Its net income for the trailing twelve months (TTM) ending in June 2015 was $-188 Mil (Bezos, 2015). In comparison to three of its top competitors, Amazon has the lowest net income.
Amazon is remaining steady to its model and is still providing goods at a low price, and providing their deliveries in the shortest amount of time. Amazon maintains the practice of making sure that every product it sells turns a profit. However, the debate lingers especially with investors who are expecting a return on their investments. The chief executive of Forrester Research George Colony stated in a New York Times article that “At some point, the piper must be paid.” How? “By raising prices. I don’t see any other way” (Streitfeld, 2013).
Kroger has spread through to many different store formats, including supermarkets, department stores, convenience stores, and jewelry stores. According to STORES Media, Kroger supermarket chain worth 115 billion dollars, only second to Walmart. Kroger is also the third largest private employer in the Unites States with 443,000 employees according to kroger.com. Kroger is in 34 states and will most likely expand into more with time. The advantage Kroger has amongst its peers is the connivence an uniform quality within their stores. Even franchises such as Fred Meyer that Kroger owns will have similar store options and products in other Kroger owned stores. This advantage, similar to that of Starbucks, lets consumers know what to expect when entering a Kroger store. Unlike Columbia, Kroger has an very large number of employees, meaning a lot more opportunities for a job within the
To most consumers Whole Foods is known as a chain grocery store specializing in organic and natural foods. Some may go as far as say the name is synonymous with quality. This comparison is the result of Whole Foods’ marketing their brand successfully to consumers demanding their specialized foods. As with any organization, Whole Foods may consider evaluating their strategic objectives and decide if necessary course corrections are needed to reach their objectives and goals. Through a fundamental and technical analysis, I will discuss Whole Foods’ mission, vision, and goals, their competitive environment, and some factors within their strength, weakness, opportunity, and threat analysis. With such data and information I will recommend, if needed, and strategic changes in order to sustain a competitive advantage.
Consequently, as a whole Cramer described this possible event as a “destruction of society”. As result, of Amazon making the move of taking over Whole Foods Cramer explained that this will eventually destroy market margins but will essentially lead to owning the food and groceries industry. Understanding why Amazon needed to purchase Whole Foods is crucial because they of needing to serve customer with prepared food as well as fresh foods in which Amazon can not currently provide. Importantly,
Technology has played a huge role in how companies today conduct business with their consumers. Over the past few decades there has been a shift in business models and strategies because of the emerging innovation in technology. One of these innovation are e-commerce, businesses that use e-commerce can now see a major difference in sales and revenue. Amazon has taken the idea of e-commerce and turned it into a successful and profitable business. Amazon Company developed a brilliant strategy for emerging into an already competitive market. This entails the revision of an existing concept. Unlike major companies like Apple, Microsoft that invented new products and services, Amazon did not need to create a whole new product but to create a better business model system that can be used in the future. This helped their rise to fame by taking over an existing idea but improving it to match consumer needs and wants. Overall companies will need to develop better business strategies to be able to evolve into e-commerce industry moving forward.
Eule, A. (2013). It’s time for Amazon to open its black box. Barron’s, 93(42), 37.
From the consumer side, Amazon provides services like Amazon Prime, which delivers free two-day shipping on retail purchases, on-demand video streaming and a free access to the Kindle library, everything for an annual
Many common grocery items are said to be very elastic because in today’s grocery store there many food alternatives to choose from. Recently, there has seen an increase in the price of eggs due to an ourbreak in bird flu. Therefore, egg suppliers have less inventory for their distributors causing a shortage. This shortage has caused an increase in the price of eggs. The shortage is impacting consumers as well in the grocery store. In a recent article, “Texas-based supermarket owner H-E-B recently announced it is limiting the number of cartons of eggs its customers can buy at all its stores” (La Monica). When the price of eggs rises above the norm, consumers simply switch to less expensive alternatives for cooking or simply avoid buying eggs for a period of time. Eggs are not a necessity for most consumers. Milk also tends to be elastic. There have been many times when milk has incurred shortages due to certain cow diseases affecting milk production. When milk prices are high there are substitute products such as goat milk and almond milk are options for consumers. For consumers with large disposable incomes, price increases on common items may not impact their purchase patterns as it may be a small percentage of their
Grocery stores and food markets have dropped their prices to accommodate these changes and help out our fellow people; while making a much higher revenue as well. At the same time restaurants are trying to save their business by selling their food at a cheaper value rather than to make at home, and even fast food value items are slightly cheaper with many buy one get one deals. I believe if you take the time to do the math you will see that you can make a homemade burger for less than it would cost at Burger King or