Retail | Bezos did WHAT?
Cutting prices in conjunction closing the WFM deal. Good w FTC next time. Even better luck competing w this beast (or the WMT beast).
Yah…you read that press release right.
- Bezos is cutting prices “on a selection of best-selling grocery staples across its stores” IN SYNCH with closing on the Whole Foods deal. Integrating Prime into Whole Foods POS system. Prime members get special discounts. Next step Whole Foods Private Label will be avail on Prime (not sure if that will work).
- I guess that’s what happens when the FTC unconditionally approves a deal.
- Though we rarely see anti-trust issues when anything ACCRUES to the consumer – instead of gauges prices – my sense is that the FTC thinks twice before ‘unconditionally approving’ when Amazon wants to pick Dick’s or Best Buy (which both make 100% sense from a real estate perspective).
I still think that AMZN is the biggest roll-up we will ever see – in any industry. I’m long AMZN, but I think a better way to long the ‘Amazoning of America’ is to buy WMT. I also think that ‘Amazoning’ will prove to be a huge buzzword that dissolves in 18 months (like JIT, Supply Chain, Lean Manufacturing, and OmniChannel).
- AMZN needs stores. Validated that by growing its store/DC square footage by 25% w Whole Foods.
- WMT has 4177 stores. Needs e-comm platforms – that it started to add in tangential categories 2 years ago. Jet.com, hayneedle, mod cloth, Moosejaw, bonobos. Don’t bet against WMT’s balance sheet, or its ability to give AMZN a run for its money in owning the final mile.
- Why not wake up one day and see AMZN buy Wayfair? There's a much bigger list. Dilutive or not does not mean things won't get done. Cross sector deals are the new normal. Saying 'that deal can't get done' is a JV mistake.
Let’s not forget about the WMT/GOOG partnership. (From RetailDirect yesterday – ping if you want to opt in)
Here’s all you (or I, at least) need to know about WMT/GOOG Express – even if you don’t care about Google, Amazon, or Wal-Mart. A step closer to by strong view that this is becoming a 2-horse race between AMZN/WMT.
- Pros: It’s all about DC leverage in retail today. GOOG leverages WMT’s irreplicable 4177 store base (already has TGT and Costco). WMT leverages GOOG’s name for a more upscale (than WMT) customer. Bezos probably saw this coming (let’s face it…he DEFINITELY saw it coming), but it’s no less powerful. GOOG wakes up one day and gets a step closer to owning the final mile – without acquiring it.
- Only part of WMT I worry about is Sam’s – which is at risk as AMZN moves down the FICO spectrum and incentivizes people to not ‘cube out’ when buying 24 rolls of paper towels and cramming in a Prius.
- Amazon Prime still has, free shipping, audible, music, Prime Video – incl Netflix-ish series, Academy Award winning films, NFL streaming rights…etc…etc…etc. GOOG/WMT gonna have a tough time competing there.
Regardless the pin action here is fierce and will get fiercer. Good luck Target.
