Tuesday, 21 August, 2018

Walmart stepping up retail fight against Amazon — BUSINESS REPORT

Bonobos Bonobos
Troy Mann | 28 June, 2017, 04:19

But don't expect them to replace cashiers immediately. Instead, Amazon is adding its own logistics network because it simply can't have enough - not surprising considering the company was responsible for 43 percent of all online sales in the USA past year.

Amazon has a little more than 3 million square feet of USA warehousing dedicated to its existing AmazonFresh and Prime Pantry grocery programs - a tenth of the warehouse space Wal-Mart has for specialized food distribution, according to logistics consulting firm MWPVL International Inc. The deal hasn't even been finalized. Amazon has been trying to get into the grocery and food market for some time, particularly with Amazon Fresh.

The e-commerce giant would need to add a large network of specialized grocery distribution warehouses, former AmazonFresh employees and logistics experts said.

Working in Amazon and Whole Foods' favor is the growing acceptance of store brands, also known as generic or private-label brands.

While it's impossible to predict how this will play out and what moves will follow, I think it's a reasonable bet that Microsoft won't try to one-up Amazon and acquire a retailer such as Wal-Mart. The supermarkets that remain will cater to individual customers and market to them based on key characteristics - such as a vegan diet or a peanut allergy - to shape the entire shopping experience.

For so-called "Big Food", this news comes as yet another blow with the consumers' desire for fresher, healthier products reshaping food retail.

The acquisition of the two companies means Amazon can vertically integrate a business it has dabbled in since 2007, when it first offered grocery delivery in Mercer Island, Wash. Will Amazon's purchase of Whole Foods be the death knell for cashier and sales positions?

MARGOLIS: The obvious way that Amazon could make grocery shopping more convenient for some people is through improving online delivery.

"All stores are not going away, it's just a matter of finding the store/online equilibrium", Credit Suisse analysts said in a note. And outside Fresh Direct, I can't find any place in the USA where Internet-ordered groceries are more than 2 percent of the market. Kroger has almost 2,800 stores that operate under a variety of names.

Who can get around the travel ban?
Refugees "in transit" and already approved would have been able to travel to the United States under the executive order. The Ninth Circuit Court of Appeals later stayed both the six-country ban and cessation of the refugee program.


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An easier way to order someone else an Uber ride has arrived
Uber's biggest rival, Lyft, doesn't now offer consumers the ability to arrange a ride for another passenger from inside its app. The rider wouldn't quite know which vehicle to be looking for the and the driver wouldn't know who the rider is.


"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains. "I just worry that Amazon will really degrade the kind of customer service and quality I'm accustomed to".

In the meantime, other retailers are getting into the delivery game by teaming up with startups.

But Amazon is not very profitable, which may be why it can't shake the money-burning image of its dot-com infancy in the mind of a computer technician who doesn't pay much attention to business news. "ORCRP000017408-topic.html" class="local_link" >Wegmans. Whole Foods is also among its partners, though the fate of their five-year contract may now be up in the air.

Doing so with Whole Foods brands as well would help lower costs - and possibly diminish Amazon's reliance on packaged food makers like Kraft Heinz and PepsiCo. The 11,700-unit chain, which has been on an e-commerce tear recently with the purchases of Bonobos, Modcloth and Jet.com, devoted $2.2 billion to USA advertising past year, according to Ad Age's LNA report.

In the past, Amazon has been willing to lower price tags at the expense of margins to gain traction in a new market. Sprouts has about 270 locations in 15 states. While Amazon rose 3% after the announcement, the grocery industry shuddered.

The results may look like this: A customer's favorite grocery store's app sends promotions on his most-purchased items every Wednesday (since it knows he shops on Wednesday nights) and offers recipe suggestions based on what was bought in the past. So this is probably a bit of an unexpected surprise for shareholders, but at $42 per share, Amazon is paying about 31 times trailing earnings for the company.

On the price front, Walmart, Target and Kroger were already feeling pressured.

In the USA "this adds 440 refrigerated warehouses within 10 miles of probably 80 percent of the population", said Michael Pachter, an analyst for Wedbush Securities. And the pricing pressure may intensify.

Separately, Amazon has been testing no-checkout technology at a convenience store in Seattle. Meanwhile, Amazon's most formidable rival in the retail industry, Wal-Mart, which has a storied history of using its IT purchasing clout to its advantage, is among several large retailers that have told IT providers that if they want Wal-Mart's business, they can't use solutions dependent on AWS, according to a report in the Wall Street Journal this week.

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