In this file:
· Why Amazon's New Grocery Ambitions Could Be a Mistake
· Amazon might be dropping plans to cut Whole Foods prices
· Amazon to Diversify Grocery Portfolio
· Amazon to reportedly close all of its 87 pop-up stores in the US beginning in April
· Amazon Raises Minimum Wage For Whole Foods Workers, Then Hours Get Cut
Why Amazon's New Grocery Ambitions Could Be a Mistake
The business rationale for launching another supermarket vertical seems hazy at best.
Jeremy Bowman, The Motley Fool
Mar 6, 2019
Amazon.com (NASDAQ:AMZN) has been angling for a piece of the $660 billion grocery industry for more than a decade.
In 2007, the company launched Amazon Fresh, an e-commerce grocery delivery service, in its hometown of Seattle. But Fresh's slow growth only gave it a sliver of the massive supermarket industry, so Amazon acquired Whole Foods Market for $13.7 billion in 2017, immediately making it a major player in the industry.
Now, according to The Wall Street Journal, Amazon's ambitions in the industry extend beyond Whole Foods as the e-commerce giant is planning to open its own supermarkets, targeting lower prices and products, like Coca-Cola, that can't be sold at Whole Foods.
Amazon stock rose 2% that day while supermarket stocks such as Kroger (NYSE:KR) briefly tumbled, in a move reminiscent of the sector's plunge when Amazon said it would acquire Whole Foods.
While it's clear that the e-commerce giant, with its reputation for aggressive pricing and history of favoring market share gains over profits, poses a threat to its new supermarket rivals, it's less evident why Amazon is so focused on the industry. After all, supermarkets are a slow-growth, low-margin industry. Amazon, on the other hand is primarily seen a tech giant, and it's valued as such, with a P/E ratio of 84.
The market takes for granted that Amazon wants to sell all things to all consumers, but it may not be in investors' best interest for the company to launch its own grocery business or pursue a significant share in the industry to begin with. Such a move deserves a closer examination.
Mixed results from Whole Foods ...
Supermarkets aren't scalable ...
One caveat ...
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Amazon might be dropping plans to cut Whole Foods prices
By Steve Watkins, Cincinnati Business Courier
Mar 6, 2019
Amazon.com Inc. might be dropping the idea of making Whole Foods Market’s products less expensive not long after many analysts feared Amazon’s ability to lower prices could dramatically change the supermarket industry.
Amazon (NASDAQ: AMZN) is launching a new grocery store chain based largely on providing wider variety and lower prices than its Whole Foods Market does. The Wall Street Journal previously reported Whole Foods is raising prices on about 550 items as a result of pressures from consumer product companies.
Now, investment website the Motley Fool says the combination of those factors might mean Amazon has thrown in the towel on significantly cutting Whole Foods prices.
“Amazon could be taking a two-path approach that lets Whole Foods continue to be the upscale grocery store people think it is, while giving them a new opportunity to shop at a traditional supermarket under the Amazon banner,” Rich Duprey wrote in a Motley Fool article. “The fact that Amazon is allowing (prices) to rise on hundreds of items suggests it is no longer willing to absorb the increases and has accepted Whole Foods as the upscale shopping experience it’s always been.”
After Amazon bought Whole Foods in August 2017, some analysts predicted prices would fall quickly at Whole Foods, which is sometimes nicknamed "Whole Paycheck." Amazon did cut prices immediately on dozens of products.
But I wrote last year that analysts and researchers had found Whole Foods prices hadn’t been cut by much. In fact...
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Amazon to Diversify Grocery Portfolio
Brian German, Ag Net West
March 6, 2019
Amazon is looking to make some significant changes in their grocery portfolio. After acquiring the grocery chain Whole Foods back in 2017, Amazon went to work making changes to product offerings and prices. In January Whole Foods announced that it would stop developing new Whole Foods 365 locations, which were designed to be a small-format brand of store aimed at millennials. Whole Foods now plans to convert the existing dozen locations into full-size Whole Foods grocery stores.
Amazon is also reportedly looking to diversify the company’s grocery offerings. Sources told the Wall Street Journal that Amazon plans to further develop its grocery business by opening stand-alone stores not affiliated with the Whole Foods brand. The plan is reported to be the opening of dozens of grocery stores in several major U.S. cities, with the first grocery store projected to open before 2020 in Los Angeles. The move to develop more physical stores comes after apparently mixed results with the food delivery service offered by Amazon.
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Amazon to reportedly close all of its 87 pop-up stores in the US beginning in April
Amazon will close all of its pop-up locations in the U.S. beginning next month, The Wall Street Journal reported.
Amazon has 87 pop-up stores that let customers try and buy its products and services.
The company is also planning to open dozens of grocery stores and potentially thousands of Amazon Go stores, according to earlier reports.
Todd Haselton, CNBC
Mar 6, 2019
Amazon will close all of its 87 pop-up locations in the U.S. in April, according to The Wall Street Journal.
Amazon has pop-up inside Whole Foods locations, Kohl’s stores and malls around the U.S. The shops let customers try Amazon products — such as Fire tablets, Kindle e-readers, Echo smart speakers — and Amazon services, like Prime Video, Audible and Kindle Unlimited.
“After much review, we came to the decision to discontinue our pop-up kiosk program,” Amazon told the Journal.
Amazon told the paper it will instead focus on building new 4-star stores, where the company...
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Amazon Raises Minimum Wage For Whole Foods Workers, Then Hours Get Cut
Graeme Gallagher, The Daily Caller
Amazon recently began a $15 minimum wage for its employees at Whole Foods, but then the grocery store began cutting workers’ hours, according to the Guardian.
The multinational e-commerce company enacted the increased wage in November for all U.S. workers, in response to public pressure and criticism over its pay for employees.
The same wage increase that the supermarket chain employees fought for, however, has lead to widespread cuts across stores, Whole Foods employees told The Guardian.
“My hours went from 30 to 20 a week,” said one Illinois-based worker. “We just have to work faster to meet the same goals in less time.”
Once the wage increase was established, the worker said that part-time “employee hours at their store were cut from an average of 30 to 21 hours a week” and that full-time employees were “reduced from 37.5 hours to 34.5 hours.”
The worker showed schedules of their department to the Guardian from November to January that showed workers’ hours “significantly” decreased, while the store labor budget “stayed relatively the same.”
“This hours cut makes that raise pointless as people are losing more than they gained and we rely on working full shifts,” said a Maryland worker, who had their full-time schedule cut by four hours.
In order to make up for the missing hours, some of the grocery-chain workers have dipped into their paid time off and used it to round their hours up to 40.
“At my store, all full-time members are 36 to 38 hours-per-week now. So, what workers do if they want a full 40 hours is take a little bit of their paid time off each week to fill their hours to 40,” explained a worker in Oregon. “Doing the same myself.”
In addition, the cut hours have led to understaffing issues that have affected how the store runs.
“Things that have made it more noticeable are the long lines, the need to call for cashier and bagging assistance, and customers not being able to find help in certain departments because not enough are scheduled, and we are a big store,” said California worker...