As soon as it was announced that Amazon is taking over Whole Foods, investors quickly bet against other retailers. Walmart, Costco, and Kroger stock lost nearly $19 billion (yes, with a ‘B’) in value last Friday.
Since we now live near a Whole Foods store, I’m interested in how this is going to play out and how it will affect us as consumers.
I’m a bit puzzled by the immediate financial hit to brands like Costco.
Is it really times to give up that Costco membership? I don’t think so.
At the end of 2016, Whole Foods had 431 stores and had scaled back new store openings, while Costco had 727 locations.
Costco boasted about 85 million members. Amazon Prime numbers, the closest comparison, are secret, but estimated somewhere between 54 million and 80 million (a number that reportedly includes trial memberships and student members).
Up until now, Costco seems to have competed effectively with Amazon in areas where they overlap, such as electronics and apparel, so I’m not convinced this is necessarily going to be a slam-dunk for Amazon to pull off.
Amazon also has the daunting task of digesting Whole Foods without undermining the things that the WF brand stands for. Or, perhaps, they think that doesn’t matter.
Then today I read a fascinating article, “Amazon’s new customer,” at stratechery.com.
It’s a very perceptive analysis of Amazon’s approach and well worth pondering.
And now I’m not sure what to think!
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Good post! It reminded me of the book The Everything Store by business reporter Brad Stone. It’s like a biography of Amazon. Learned a lot about Amazon’s strategy reading it.
It’s my understanding that Costco is a “good” supplier, taking more care than most to buy responsibly, treat their employees well, and generally be healthy and productive contributors to our communities as well as our households.
Not every merchant is honorable. We can always hope to do the bulk of our business with those who are.
Really good opinion piece in NYT about Amazon: “Amazon Bites Off Even More Monopoly Power”. Here?s a quote from it:
“Think of Amazon as a 21st-century version of the 19th-century railroads that connected consumers and producers. Because of their gatekeeper role, railroads had power to discriminate, both among users and in favor of their own wares. These middlemen could tax the farmers and oil producers who depended on their rails — or deny them a ride and sink their livelihoods.”
https://www.nytimes.com/2017/06/21/opinion/amazon-whole-foods-jeff-bezos.html?hpw&rref=opinion&action=click&pgtype=Homepage&module=well-region®ion=bottom-well&WT.nav=bottom-well