By now, Amazon.com’s (AMZN) purchase of Whole Foods Market (WFM) is old news. I’d love to tell you that I expected this merger to happen… but that might be stretching the truth a little. Though back in October of last year, I did tell Newsmax TV that I expected to see Amazon make a major move in the grocery space:
To be sure, Newsmax Finance Insider Charles Sizemore recently predicted to Newsmax TV that Amazon is about to “upend the grocery industry” as it plans to expand its grocery business with shops that let people quickly pick up milk, vegetables or other perishable foods.
“Amazon is trying to get your grocery dollars for a very good reason,” Sizemore told Newsmax TV’s JD Hayworth.
“Groceries, while they are a low-margin business, it’s still something that every American pays for, usually on a weekly basis. If you’re already buying your groceries at Amazon, you might also buy something that’s higher margin,” he said.
“Amazon’s smart, they know what they’re doing here,” he explained. “I have a feeling they’re about to really upend the grocery industry. It’s about to get really interesting. It’s just not quite what everyone’s expecting.”
See Amazon’s Whole Foods Conquest Is a ‘Game Changer’ to read the full article.
Amazon founder Jeff Bezos famously said “Your margin is my opportunity.” I don’t expect groceries to be any different here. Groceries aren’t an exceptionally high margin business already, but you can bet that Amazon will squeeze them a lot harder.
It’s worth noting that Amazon isn’t the only competitor looking to shake up the grocery business. Walmart (WMT) itself was a major disruptor two decades ago, and the Behemoth of Bentonville isn’t sitting idly while Amazon takes over the world. Walmart recently opened a state-of-the-art automated grocery pickup kiosk that allows shoppers to order their groceries in advance and skip the hassle of having to actually enter a Walmart store.
If I were Kroger’s (KR) management, I’d be terrified right now.