The $13.7 billion deal that brought upscale grocery chain Whole Foods under the ever-evolving umbrella of Amazon has had at least one immediate effect on consumer: Lower prices at a store known for anything but. Problem is, according to a recent Chicago Tribune report, these slashed prices aren’t enough to compete with the likes of Walmart and Kroger markets. According to Todd Katz, who has eight years of financial leadership experience as a CFO and helped oversee the finances of a global pipeline inspection company, competing on a national scale will be a healthy exercise for Amazon. That’s because Todd Katz says Amazon, which already has the online product-shipping market cornered, would do well to learn a little bit from its competition and come away with better business practices.
According to the Tribune article dated Aug. 31, 2017, Amazon wasted no time cutting prices at Whole Foods. For example, Kettle Sea Salt chips cost $2.69 at Whole Foods while they rang up for $2.98 at Walmart. However, that’s a lone example in a longer list of items still costing less at the discount superstore. According to the report, the majority of fruits and produce were still cheaper at Walmart while some meat was far less expensive. “It was a bold statement on the first day, but it wasn’t that many items that were moved,” a Bain & Co. consulting firm grocery expert told the newspaper.
However, another driving force behind the purchase is to encourage online grocery shopping. Amazon clearly has its eyes on the future, says Todd Katz, who oversaw massive growth at his former employer. For example, his company saw revenue climb from $14 million in 2008 to $75 million in 2016; employee count go from 55 in 2008 to 285 in 2016; and the fine-tuning of a highly-efficient finance team of 12 members come 2016.
Whole Foods is unabashedly an upscale grocer and has for years operated on this premise. Penny-pinching was rarely a concern for regular Whole Foods shoppers, so Amazon’s move might not convert too many of those on a budget to give this outlet a shot. As previously stated, Amazon is already offering its grocery delivery service in many cities across the country and the Tribute report adds that it has been eyeing a “convenience store concept.” Why not expand their portfolio to wrangle in a well-known brand that gives them a physical footprint and not just shipping centers dotting the globe, asks Todd Katz.