Market Overview

Whole Foods Is Ramping Up Its Price Cuts; Should Walmart Be Worried?

Share:
Whole Foods Is Ramping Up Its Price Cuts; Should Walmart Be Worried?
Related AMZN
Tech Sector Earnings: Revenue Growth Widely Expected To Slow, Will Global Uncertainty Weigh?
May's Brexit Plan Defeated: Here Are The Markets' Winners & Losers
Information Technology Sector: Apple's Warning Weighs Ahead Of Q4 Reports (Seeking Alpha)
Related WMT
Raymond James: CVS A Strong Buy Despite Pricing Headwinds
Shoe Retailer DSW To Sell Green Growth Brands' CBD Products
My Recent Target Experience And How The Chase For E-Commerce Market Share Is Killing Retailer Margins (TalkMarkets)

After Amazon.com, Inc. (NASDAQ: AMZN) purchased Whole Foods, the (once) expensive grocery chain immediately became a threat to Wal-Mart Stores Inc (NYSE: WMT)'s grocery business.

While Whole Foods previously was never in the same conversation as the world’s largest retailer due to the former's clientele and expensive prices, now under the Amazon umbrella, it is inheriting a new competitive edge against Walmart.

As Benzinga previously reported, Amazon's emphasis of market share over profits could severely disrupt the grocery pricing model. 

When Loop Capital analysts visited the “new” Whole Foods, a key takeaway was that the grocer may have lowered additional prices and that Amazon may be perceived as Walmart’s key competition in most general merchandise categories.

In all, over 400 prices were lowered at Whole Food’s after Amazon took over. When news first broke of Amazon lowering prices, only 100 items were reported.

“As we looked around the store, we believe this may have been reflected in a combination of both lower everyday price tags and an increased amount of sale price tags,” said Andrew Wolf, managing director at Loop Capital.

Wolf also noticed that produce and dry grocery items at Whole Foods, key departments that have been underperforming received solid increases in volumes since price cuts.

Walmart has already been responding to Whole Foods improvements by bettering its own food merchandising efforts.

“Wal-Mart’s increased wages and benefits have helped store management retain trained workers which has boosted critical merchandising efforts in produce in particular,” said Wolf.

As the war heats up between Amazon/Whole Foods against Walmart in the grocery department, Loop Capital remains cautious on food retailing as whole because of the heightened competitive cycle that the industry is currently in.

Related Link: Amazon's Emphasis Of Market Share Over Profits Could Keep Whole Food's Prices Low

Latest Ratings for AMZN

DateFirmActionFromTo
Oct 2018JefferiesMaintainsBuyBuy
Oct 2018Bank of AmericaMaintainsBuyBuy
Oct 2018BarclaysMaintainsOverweightOverweight

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: AmazonAnalyst Color News Commodities Markets Analyst Ratings Trading Ideas General Best of Benzinga

 

Related Articles (AMZN + WMT)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SHWKeyBancMaintains450.0
ACNCitigroupUpgrades169.0
CGBDJP MorganUpgrades15.5
NLYJP MorganUpgrades10.5
NTNXMorgan StanleyUpgrades58.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Disney Rattles Media Sector On Pullback Of Marvel, 'Star Wars' Offering

4 Catalysts Driving A Bullish View On Restaurant Brands