I just don't see this Amazon thing as the end of the world for Kroger. Just because they bought Whole Foods does not mean they understand how to run a grocery business. They purchased a company that was struggling in the marketplace and being eaten alive by Kroger. Amazon is leaving the management team there intact. I don't see how that changes the course of Whole Foods.

 

Now, Amazon does bring the cache of throwing tons of money into propping up the business but again, that assumes they know what they are doing in the grocery business. It is going to take them a while to get up to speed to even make a dent in the industry.

 

Everyone assumes Amazon is the most amazing company, but they really do not make much of a profit. What amazes me is how they get their investors to hang with them for so long on this potential that may never come. I still think they are a house of cards

 

Well Amazon bought Whole Foods, which does know how to run a grocery business. What Amazon does extremely well is build all the behind the scenes infrastructure and logistics. If Amazon can use their knowledge to optimize Whole Foods' supply chain, they can squeeze more profit out of it.

 

Whole Foods has always been smart about having events in the store to draw people in, and people might buy a thing or two while they're in the store. In an era when so much shopping is shifting online, it will make a lot of sense for Amazon to add pick-up locations inside Whole Foods. People will go pick up their package and then remember that they need some milk. Amazon operates some pick-up locations inside 7 Eleven convenience stores, but with Whole Foods, they can now profit on both sides of the deal.

^ Whole Foods was getting eaten alive by Kroger. Amazon did not buy Whole Foods because it was the pretty girl at the party, they were a wounded duck with a name. Kroger had their look at Whole Foods and passed as the value was not there.

 

Amazon is interesting because they have a huge market cap, but they still have yet to turn consistent profits. It seems like they want to control household products and staples, but they almost are spreading themselves too thin in doing it. It almost seems less about groceries and more of a logistics play to me with their ever expanding air hubs and ground delivery, they are developing the critical mass to put UPS and FedEx out of business and develop monopoly power in that arena

From the limited stuff I've read, I think the biggest threat to any company, from Amazon is their plan for home delivery, especially with drones. People would be such suckers for that. Consumers would compromise quality and value to have something home-delivered.

 

I'm still amazed by how dazzled the public was by that drone news 2~ years ago.  Everyone (not me, of course) thought that the drones were going to be in the air by the end of the year.  Here we are several years later and it's not happening.  But everyone is still dazzled. 

 

I think Amazon's core business is lazy, disorganized, and emotional people. 

 

 

One interesting thing about it though, is how the set-up of retail stores affect the psychology of the consumer. As you enter, you're immediately bombarded with stuff in front that you probably don't need but are tempted to buy because...well, we're human. The practical and cheap (often directly or indirectly subsidized) items such as produce, dairy (milk, eggs and whatnot) as well as grains - which Americans are led to believe they should consume a ridiculous amount of, as well as fresh meats (these departments are the main reason we go to these stores in the first place) are all on the fringes/ at the extremity of these giant stores. Their carefully engineered layout is very effective in terms of maximizing sales.  Home delivery eliminates any chance of using corporate psychology tactics but at the end of the day, we live in a very consumer-driven society where people know exactly what they want and demand it.

 

Amazon has plenty of its own ways of getting product suggestions to its customers' eyeballs.  Physical placement in a brick and mortar store is not the only way to do that.  Not by a long shot.

 

^ Whole Foods was getting eaten alive by Kroger. Amazon did not buy Whole Foods because it was the pretty girl at the party, they were a wounded duck with a name. Kroger had their look at Whole Foods and passed as the value was not there.

 

Kroger's market cap is about $20B.  Acquiring Whole Foods for $13.7B would have been a bet-the-company move on their part, and would have expanded them only slightly in a market that they are already in.  Amazon is around $440B; even if this acquisition flames out, Amazon will survive.  Moreover, Amazon acquired 450 stores to expand a base of about 5.  Kroger operates nearly 2800 stores, according to the Investor Relations page that I just checked.  Adding 450 stores (at a cost of about $30M per store) would make no sense for Kroger; it could build more than 450 news stores for that price if it needed it, to its own specifications and in locations of its own choosing.  Acquiring the various contracts and relationships and brand of Whole Foods would be of less interest to Kroger than to Amazon.

 

Amazon is interesting because they have a huge market cap, but they still have yet to turn consistent profits. It seems like they want to control household products and staples, but they almost are spreading themselves too thin in doing it. It almost seems less about groceries and more of a logistics play to me with their ever expanding air hubs and ground delivery, they are developing the critical mass to put UPS and FedEx out of business and develop monopoly power in that arena

 

Amazon is enormously misunderstood by people who look only at the bottom line of financial statements and never bother to read in the middle.

 

Amazon turns solid gross profits and almost never sells goods or services at a loss.  Its revenue last year was around $136B.  Its current market cap is around $440B.  Of course, its reported earnings barely qualify as break-even for a market cap of that size.  But it has been financing almost all of its capital needs out of gross profits rather than tapping capital markets.  Amazon obviously has a monstrous build-out of distribution centers, data centers, etc., as well as an impressive IP portfolio.  All of that, and Amazon's total long-term debt is around $15B (and they've been doing that largely because AAA corporate debt has just been so cheap that their CFO couldn't justify not doing it--they ended 2012 with about $3.8B in long-term debt and they could operate completely debt-free if they wanted).  And of course Amazon's assets are revenue-generating.  That's $136B in revenue every year (and growing) supported by a comparatively tiny amount of debt, because Amazon has been growing just by relying on its operating budget.

 

The "Amazon doesn't turn a profit" argument would be a lot stronger if Amazon were financing its expansion with borrowed money and still not showing a profit.  In fact, if Amazon was more short-term-focused and wanted to play some games with the balance sheets, it could look more profitable simply by borrowing more long-term debt (which wouldn't appear on the income statement, though it obviously would on the cash flow statement) and retaining more of its revenue on an annual basis as earnings, essentially throwing a party today by casting the expense of expansion far enough into the future that only a tiny portion of it would appear on this year's income statement.  Certainly there are activist Wall Street funds that have done that to less well-fortified companies, forcing them to focus on the short term to placate corporate raiders.  Amazon's success has allowed it to grow large enough fast enough to be resistant to such tactics.

From the limited stuff I've read, I think the biggest threat to any company, from Amazon is their plan for home delivery, especially with drones. People would be such suckers for that. Consumers would compromise quality and value to have something home-delivered.

 

I'm still amazed by how dazzled the public was by that drone news 2~ years ago.  Everyone bought that the drones were going to be in the air by the end of the year.  Here we are several years later and it's not happening.  But everyone is still dazzled. 

 

I think Amazon's core business is lazy, disorganized, and emotional people. 

 

 

 

 

We might eventually find out that is true of all the biggest names on the internet. That's another reason net neutrality is important -- keeping niche areas of the internet alive so that the smart, interesting and fun people still have a place to congregate.

  Amazon's success has allowed it to grow large enough fast enough to be resistant to such tactics.

 

I'm not sure that the world has gained anything by Amazon's "success".  It has merely shifted low-wage workers from one realm to another and enabled people to be a little lazier and sloppier. 

 

Similarly, Kroger's gradual evolution from neighborhood stores to "supermarkets" has served no public good either.  People might save $100 annually on their groceries thanks to the greater scale, but they now must drive further to do something that people historically walked to, so there is no way they're coming out ahead. 

 

  Amazon's success has allowed it to grow large enough fast enough to be resistant to such tactics.

 

I'm not sure that the world has gained anything by Amazon's "success".  It has merely shifted low-wage workers from one realm to another and enabled people to be a little lazier and sloppier.

 

You call it lazier and sloppier, I call it managing to avoid unnecessary shopping trips in a household with two working adults (one of whom is pregnant) and one two-year-old.  Of course we make plenty of trips to the regular grocery store as well, and we likely still will even when the Whole Foods 365, now owned by Amazon, opens in Akron.

 

I also call it greatly streamlining the process of shopping for Christmas presents for my nieces and little cousins who live in other states.  You can say I'm too lazy to buy presents locally, wrap them myself, then get them into UPS boxes, then ship the boxes containing the wrapped boxes across the country.  You'd even be right.  But I still definitely call that a gain.

 

Amazon Echo's voice-activated home technology has also made it a lot easier to get music playing for my kid when I'm also juggling way too many other things, as parents sometimes are (especially right when they get in the door).  Maybe I'm spoiling him and he ought to learn to wait, but I call it value added when he doesn't have to.

Similarly, Kroger's gradual evolution from neighborhood stores to "supermarkets" has served no public good either.  People might save $100 annually on their groceries thanks to the greater scale, but they now must drive further to do something that people historically walked to, so there is no way they're coming out ahead. 

 

BTW, I have heard some rumblings that Kroger is disappointed by the performance of their new giant Marketplace store in Oakley. This might be the first sign (to Kroger) that their strategy of closing down all the neighborhood stores and consolidating them into mega big box stores isn't going to work every time. They should've learned this lesson after the opened the giant Newport store and then found out that the tiny Bellevue store kept doing well...because not everybody wants to do their grocery stopping in a mega store.

  Amazon's success has allowed it to grow large enough fast enough to be resistant to such tactics.

 

I'm not sure that the world has gained anything by Amazon's "success".  It has merely shifted low-wage workers from one realm to another and enabled people to be a little lazier and sloppier.

 

You call it lazier and sloppier, I call it managing to avoid unnecessary shopping trips in a household with two working adults (one of whom is pregnant) and one two-year-old.  Of course we make plenty of trips to the regular grocery store as well, and we likely still will even when the Whole Foods 365, now owned by Amazon, opens in Akron.

 

I also call it greatly streamlining the process of shopping for Christmas presents for my nieces and little cousins who live in other states.  You can say I'm too lazy to buy presents locally, wrap them myself, then get them into UPS boxes, then ship the boxes containing the wrapped boxes across the country.  You'd even be right.  But I still definitely call that a gain.

 

Amazon Echo's voice-activated home technology has also made it a lot easier to get music playing for my kid when I'm also juggling way too many other things, as parents sometimes are (especially right when they get in the door).  Maybe I'm spoiling him and he ought to learn to wait, but I call it value added when he doesn't have to.

 

Jake has consistently shown an opinion that anything that makes life easier or more streamlined is purely "lazy." He even called shopping trolleys that you take with you to the grocery store lazy at one point. Because why make your life easier when you can just lug the bags by hand?

 

Streamlining obviously offers more time to focus on the things that actually require it instead of mindless tasks like picking one random item up at a store. But for some people that will only ever be viewed as "lazy" even though that has nothing to do with it.

A few months ago I signed up for automatic delivery of cleaning supplies and toiletries from Amazon. They give you a 15% discount if you subscribe to 5 or more items, too. I live on the third floor of a building in OTR and my parking garage is about 3 blocks away. So the less I have to carry all that distance, the better. If Amazon drops all that stuff off at the ground floor of my building, I just have to carry it up two flights of stairs and get to skip carrying it down the street for 3 blocks.

Similarly, Kroger's gradual evolution from neighborhood stores to "supermarkets" has served no public good either.  People might save $100 annually on their groceries thanks to the greater scale, but they now must drive further to do something that people historically walked to, so there is no way they're coming out ahead. 

 

BTW, I have heard some rumblings that Kroger is disappointed by the performance of their new giant Marketplace store in Oakley. This might be the first sign (to Kroger) that their strategy of closing down all the neighborhood stores and consolidating them into mega big box stores isn't going to work every time. They should've learned this lesson after the opened the giant Newport store and then found out that the tiny Bellevue store kept doing well...because not everybody wants to do their grocery stopping in a mega store.

 

 

Much like my rant a few pages back about Kroger forcing the local pharmacy out and making the local small market go vice-only.

Similarly, Kroger's gradual evolution from neighborhood stores to "supermarkets" has served no public good either.  People might save $100 annually on their groceries thanks to the greater scale, but they now must drive further to do something that people historically walked to, so there is no way they're coming out ahead. 

 

BTW, I have heard some rumblings that Kroger is disappointed by the performance of their new giant Marketplace store in Oakley. This might be the first sign (to Kroger) that their strategy of closing down all the neighborhood stores and consolidating them into mega big box stores isn't going to work every time. They should've learned this lesson after the opened the giant Newport store and then found out that the tiny Bellevue store kept doing well...because not everybody wants to do their grocery stopping in a mega store.

 

That's interesting.  I assume this is something of an analogue to the Giant Eagle Market District stores that have been opening here and there in northeast Ohio?  We had one come into the new Portage Crossing complex here in Akron not long ago, and I admit I was curious as to how it would do.  I've obviously read many articles (linked from this site's message boards as well as elsewhere) about the glut of retail space overall in this country and was kind of surprised that Portage Crossing as a whole got the green light in Cuyahoga Falls.  That said, the Giant Eagle Market District here does generally seem to have a goodly number of cars in the parking lot when I go, and I'll admit that I've gone there quite a few times myself.  That said, I'd never generalize my own experience to that of an entire city's, and I'm kind of curious now as to how it is doing relative to the expectations set for it--it gets a good amount of traffic, of course, but with the amount one of those behemoths has to cost to build, it has to get a lot of traffic just to meet expectations.

Similarly, Kroger's gradual evolution from neighborhood stores to "supermarkets" has served no public good either.  People might save $100 annually on their groceries thanks to the greater scale, but they now must drive further to do something that people historically walked to, so there is no way they're coming out ahead. 

 

BTW, I have heard some rumblings that Kroger is disappointed by the performance of their new giant Marketplace store in Oakley. This might be the first sign (to Kroger) that their strategy of closing down all the neighborhood stores and consolidating them into mega big box stores isn't going to work every time. They should've learned this lesson after the opened the giant Newport store and then found out that the tiny Bellevue store kept doing well...because not everybody wants to do their grocery stopping in a mega store.

 

My all-time favorite Kroger (for whatever reason) is the one in Ft. Mitchell, and it's a fairly small-ish Kroger, at least compared to the monstrosities they build nowadays. Very personable staff who actually know where things are. My current go-to Kroger is a Fresh Fare in Kettering (although I still haven't figured out what makes a Fresh Fare different from a regular Kroger other than maybe having an extra aisle of organic stuff?) and it's also not a very large store. Most of the Dayton Krogers are still fairly small, although the Beavercreek Kroger is on the larger size and I think the brand new Centerville one is gigantic. Ironically there was a pretty sizeable outcry when the Centerville one opened causing the shutdown of a smaller neighborhood Kroger in Kettering, so now RTA is running a shuttle bus from the location of the old Kroger a mile and a half down the road to the new mega-Kroger, which seems absurd.

I don't know what a "shopping trolley" is so I doubt that I made a comment regarding them.  I disagree that "streamlining" makes one's life easier.  Slowing things down and doing things deliberately helps retain a sense of control. 

 

When visiting a grocery store, if you arrive on foot or ride a bicycle, there is a limit to what you can buy, which is a good thing.  There really isn't anything large and heavy that is healthy (2-liters, packs of Gatorade, or arguably milk).  You can't buy much more food than you can eat before it goes bad. 

I hate the big carts now. You almost smash into everything no matter how careful you are.

When visiting a grocery store, if you arrive on foot or ride a bicycle, there is a limit to what you can buy, which is a good thing.  There really isn't anything large and heavy that is healthy (2-liters, packs of Gatorade, or arguably milk).  You can't buy much more food than you can eat before it goes bad.

 

If I were to arrive in a 25' UHaul, there would also be a limit to what I could buy and fit in my vehicle--it would just be a larger one. :-)

 

Also, I'm strongly getting the sense that you're childless.  No way I can grocery shop for three humans and one dog just using my bike (especially if I didn't also supplement it with a lot of stuff I have home delivered via Amazon).  Or else that would be a lot of bike trips.

I don't know what a "shopping trolley" is so I doubt that I made a comment regarding them.  I disagree that "streamlining" makes one's life easier.  Slowing things down and doing things deliberately helps retain a sense of control. 

 

When visiting a grocery store, if you arrive on foot or ride a bicycle, there is a limit to what you can buy, which is a good thing.  There really isn't anything large and heavy that is healthy (2-liters, packs of Gatorade, or arguably milk).  You can't buy much more food than you can eat before it goes bad. 

 

Foldable carts you take with you to haul your groceries back. Several people here questioned your comments regarding them.

 

If you asked a person 150 years ago if they'd like things like carts to carry their groceries, washing machines to speed up laundry, dishwashers to do their dishes, streetcars to ride home, etc. you'd be crazy to think they'd say, "no, I'd rather slow things down and be more in control and spend my entire day doing chores." There's a lot of benefit in modern society to giving time to important tasks and not bogging one's day down with chores.

Just a little "teaser" from the Business Journal.  (Too bad it's behind a pay wall.)

http://www.bizjournals.com/cincinnati/news/2017/06/19/kroger-could-be-poised-for-huge-merger-analyst.html

^It's important to realize for any business article, you can find "one analyst" to say just about anything... so take it with a HUGE chunk of salt. Even analysts from prestigious firms are wrong all the time.

 

 

According to the analyst quoted in the article, Kroger could acquire Dutch supermarket operator Ahold Delhaize. I have never heard of them but they apparently operate 1,500 U.S. stores along the East Coast and 6,500 stores globally.

According to the analyst quoted in the article, Kroger could acquire Dutch supermarket operator Ahold Delhaize. I have never heard of them but they apparently operate 1,500 U.S. stores along the East Coast and 6,500 stores globally.

 

Ahold operates Giant stores in the DC area and Stop & Shop in the NYC metro.

 

Cant speak for Stop & Shop but Giant is getting it's doors blown off by the steady expansion of Harris Teeter and Wegman's in the DC metro. Don't see how the Kroger brand will fix the HT/Wegman's situation but maybe they can improve on Giant's quality which has been going steadily downhill since Ahold took over. Problem is Kroger's quality isn't that great either. Going to need to bring their "A game" into these markets or Kroger will be selling these brands in no time too.

According to the analyst quoted in the article, Kroger could acquire Dutch supermarket operator Ahold Delhaize. I have never heard of them but they apparently operate 1,500 U.S. stores along the East Coast and 6,500 stores globally.

 

Ahold operates Giant stores in the DC area and Stop & Shop in the NYC metro.

 

Cant speak for Stop & Shop but Giant is getting it's doors blown off by the steady expansion of Harris Teeter and Wegman's in the DC metro. Don't see how the Kroger brand will fix the HT/Wegman's situation but maybe they can improve on Giant's quality which has been going steadily downhill since Ahold took over. Problem is Kroger's quality isn't that great either. Going to need to bring their "A game" into these markets or Kroger will be selling these brands in no time too.

 

Just an FYI, Kroger owns Harris Teeter.

According to the analyst quoted in the article, Kroger could acquire Dutch supermarket operator Ahold Delhaize. I have never heard of them but they apparently operate 1,500 U.S. stores along the East Coast and 6,500 stores globally.

 

Ahold operates Giant stores in the DC area and Stop & Shop in the NYC metro.

 

Cant speak for Stop & Shop but Giant is getting it's doors blown off by the steady expansion of Harris Teeter and Wegman's in the DC metro. Don't see how the Kroger brand will fix the HT/Wegman's situation but maybe they can improve on Giant's quality which has been going steadily downhill since Ahold took over. Problem is Kroger's quality isn't that great either. Going to need to bring their "A game" into these markets or Kroger will be selling these brands in no time too.

 

Just an FYI, Kroger owns Harris Teeter.

 

Wow, I really didn't know that, I don't shop at Harris Teeter. Now the purchase makes more sense to me because Harris Teeter is all over DC. Will definitely solidify their market share if Giant becomes Kroger. Hopefully they won't close some stores where there could be an overlap but with Wegman's rapid expansion in the DC metro it will probably not matter anyway.

 

Foldable carts you take with you to haul your groceries back. Several people here questioned your comments regarding them.

 

If you asked a person 150 years ago if they'd like things like carts to carry their groceries, washing machines to speed up laundry, dishwashers to do their dishes, streetcars to ride home, etc. you'd be crazy to think they'd say, "no, I'd rather slow things down and be more in control and spend my entire day doing chores." There's a lot of benefit in modern society to giving time to important tasks and not bogging one's day down with chores.

 

Well I still have no recollection regarding those little carts.  I didn't know they had a name until just now so again I doubt that I said anything about them. 

 

I overheard someone at work bragging about how they only paid 99 cents per gallon this past weekend for gas at Kroger.  I ignored the conversation but couldn't help but think how Kroger is fooling people just like credit card points systems.  People who proudly crow that they "pay off their credit cards every month" refuse to acknowledge that use of a credit card encourages more spending.  Everything about "saving" money in grocery stores and big box retail is all about getting you to spend more. 

According to the analyst quoted in the article, Kroger could acquire Dutch supermarket operator Ahold Delhaize. I have never heard of them but they apparently operate 1,500 U.S. stores along the East Coast and 6,500 stores globally.

Unhappily to say, this source suggests just the opposite...

https://seekingalpha.com/news/3274235-kroger-seen-takeover-target

When visiting a grocery store, if you arrive on foot or ride a bicycle, there is a limit to what you can buy, which is a good thing.  There really isn't anything large and heavy that is healthy (2-liters, packs of Gatorade, or arguably milk).  You can't buy much more food than you can eat before it goes bad.

 

If I were to arrive in a 25' UHaul, there would also be a limit to what I could buy and fit in my vehicle--it would just be a larger one. :-)

 

Also, I'm strongly getting the sense that you're childless.  No way I can grocery shop for three humans and one dog just using my bike (especially if I didn't also supplement it with a lot of stuff I have home delivered via Amazon).  Or else that would be a lot of bike trips.

 

I definitely see your point but it is scary how people don't get out of the house and shop much anymore.

 

Even though you're shopping for 3 people and a dog, it seems like you'd do just fine walking to the neighborhood stores and back, if you shopped every day or every other day. It'd probably be 30-40 minutes of your time each trip probably every other day. Not a big deal, honestly, Imo. You'd get good exercise in the process. If you have a family, you could bring someone along with you to make the trip somewhat easier.

 

Amazon promotes Schizoid culture, something I've contended for the past 11 years, is a huge problem in America. It has been, for decades. There's well-regarded sociologists who would agree with me. I'm not just talking about going out and buying groceries but just buying things in general. It's healthy to get out of the house and move around, walk, lift stuff every now and then. It's also healthy to interact and form friendships with people who work at neighborhood retail stores. Everyone opposing JMeck's argument are being realists; where we're headed is definitely more efficient and allows us to spend more time focusing on non-menial tasks (but honestly, I doubt people are actually putting that free time towards something particularly productive.) At the same time, it is important that we as humans, check ourselves from time to time, and we certainly do! Ever see the movie Wall-E? It's sadly, entirely antiquated at this point, but Blockbuster is a good example of what I'm talking about. I LOVED going into my neighborhood Blockbuster (In 2010!) and talking to the associates that I knew very well, on a first-name basis, about the movie I rented. I'd always consult them for advice on what I should rent and always had a fun conversation with them about the movie I was returning. Having real life experiences outside of the house and outside of work, like going to stores is a good way to stimulate the brain instead of just staying in the house and simply shopping online; i.e. having too much time in your life spent in front of LED pixels and digital sound waves. Ultimately, spending too much time handling business online makes for a pretty lonely and boring existence. Don't get me wrong; I love the internet and it's certainly done much more good than harm but I do believe that the internet's role in the world should be limited. JMeck isn't talking about market cap, he's talking about whether or not companies are actually good for the consumer and our culture. You're defending corporations while he's defending humanity.

 

Heh. When I lived in a big apartment building in Shaker Square, I'd go to the mailbox room and see Amazon packages all over the place, every day. Amazon boxes have a distinctive look/logo. It made me wonder how often they get stolen; if it's from Amazon, it's likely that there's something good and somewhat valuable in there or at least it's perceived as such.

 

 

Yeah, Schizoid culture or as I call it , spastic. People are very spastic today, not mellow or soothing like people from the '70s and '80s. It started with '90s ATTITUDE and snowballed from there. The Internet turbocharged it.

I live in an apartment with my wife, my child, and currently my mother in law visiting from eastern europe. We mostly use Findlay as our source of groceries and typically do not take a car. We will normally streetcar or red bike. It's easy enough to just load up our canvas bags and cart everything home on our shoulders/hands. It works out just fine and we don't have to stress out driving/parking. Various cleaning supplies, etc can be bought at Wood's Hardware or one of the Walgreens. Now with EMC in place, a lot more can be bought up at Findlay. Once the new Kroger goes in, it'll be a great place to get specialty/name brand stuff and I still won't use a car to shop there.

^^ I was talking to my grandpa the last time I spent some time with him, he is 80 now, and we were in Mason City, IA and talking about how it used to be there in the late 50's or early 60's.

 

We were at a prominent old corner in the downtown area that had been mostly all torn down.  That leads into another downtown area which was cleared for a mall sometime in the 70's.  He was saying that he loved how it was before, where there were grocers on many corners and most everyone in the whole city could simply walk or ride their bike to the grocery.  He said he liked that so much better than what it turned into.  He said it was nice to go everyday to the store and just get what you need, talk to your neighbors, to the store manager or the workers there.  It seems it would be much more refreshing than now, where going to Kroger can be stressful with all the parking and traffic, and congestion in the store, it's like a rat race...

That's exactly what I love about getting my groceries at Findlay. It's more personal and much less stressful. Any big box grocery really does feel like a rat race.

Is it true that Kroger invented the concept of fixed prices, way back in the day? I swear I saw that in some video. They said that before Kroger, you just negotiated prices with the retailer.

Looks like Amazon may not have the lock on Whole Foods after all

 

http://money.cnn.com/2017/06/19/investing/whole-foods-amazon-bidding-war/index.html

Is it true that Kroger invented the concept of fixed prices, way back in the day? I swear I saw that in some video. They said that before Kroger, you just negotiated prices with the retailer.

 

I have read that Kroger was one of the first stores where the food was on display and customers brought it to a cashier.  Previously, people told a grocer what they wanted and he gathered it all up from a back storage area. 

 

My grandfather's brother-in-law owned and operated a small grocery store for many years.  I'd guess that it closed in the mid-1960s.  He knew EVERYBODY in the area.  When he got old, he seemed to go to funerals almost every day. 

I read an article explaining why it wouldn't be a good move for Kroger. They have $322M cash on their balance sheet. $14B in debt and selling stock to pay for Whole Foods is ill-advised; I didn't know this but apparently their stock has dipped 25% since it peaked at the end of 2015 so it's obviously not a good time for that. It also doesn't make sense to buy a rival that you're already increasingly beating with your own line of organic products (Simple Truth.) IMO, Whole Foods has great brand recognition but it's based on status and not real value which is what always, ultimately wins out.

 

I'm speaking now as an every-day consumer, not a business analyst. That place is expensive as hell, for no reason except for yuppies paying a premium to shop among other yuppies. It's sad how expensive they are, for such a big box grocer. A LOT of grocery chains are going organic and being socially responsible. My God, ALDI's is now a major threat to Whole Foods! When I was growing up, Aldi's was like the bottom of the barrel! No different from Save-A-Lot. You had to put a quarter in the cart to unlock it and re-lock it to get your quarter back, just so they could prevent homeless people from stealing the carts! Aldi operates in the hood and if Whole Foods wants to generate more revenue, they should be reaching out to poor people which is a largely untapped market for them, it seems. However, with Aldi (and Kroger) already being established in the hood, do you think poor folks would ever go out of their way to shop at Whole Foods which is only established in rich neighborhoods that aren't easily accessible by public transit? They probably just don't feel comfortable in there. The beauty of Kroger is that they know how to cater to the local/neighborhood market. They adjust with each store and they typically have 'something for everybody.'

 

Everyone loves Kroger! My GF is from Cleveland and I met her in Columbus when she went to school down there and she fell in love with Kroger! And she's a vegetarian who typically buys organic stuff, lots of produce, opts for free-range eggs and all that socially responsible stuff but like me, she often times (depending on the product) will let her morals and scruples regarding healthy eating become compromised if the deal is good enough. Like me, she wishes there were Krogers up here in CLE! It's the perfect, well-rounded grocery store for everybody.

 

No matter who buys Whole Foods, Whole Foods is going to die unless they become fundamentally different but the perceived value of Whole Foods is based on their current model and reputation so that's why I say Kroger should stay out of it and continue to eat them alive.

 

Amazon is just being reckless and getting into something they know very little about because they can afford to do that.

Under Whole Foods current business model and store profile, they might already be at the point where they can't expand much more since they've already located in almost all of the no-hillbillies-within-a-10-mile-radius areas that there are in the U.S.

Is it true that Kroger invented the concept of fixed prices, way back in the day? I swear I saw that in some video. They said that before Kroger, you just negotiated prices with the retailer.

 

I have read that Kroger was one of the first stores where the food was on display and customers brought it to a cashier.  Previously, people told a grocer what they wanted and he gathered it all up from a back storage area. 

 

My grandfather's brother-in-law owned and operated a small grocery store for many years.  I'd guess that it closed in the mid-1960s.  He knew EVERYBODY in the area.  When he got old, he seemed to go to funerals almost every day. 

 

Oh, well if they were one of the first to put food on display, I guess it would make sense that they would be the first or one of the first to put price tags on stuff. Kroger has always been very innovative and it seems they still are. They were the first to implement scanners and also loyalty cards that collect consumer data. They had to be at least one of the first to implement u-scan. I definitely remember them being the first to have it, from my own experience as a consumer.

 

Kroger led the way with an app, allowing people to order online and pick up their groceries in-store. Amazon is a high-tech company who has countless in-house developers so I'm sure they think they could efficiently bring innovative tech to the grocery biz at Whole Foods but the problem is that there's inevitably going to be a huge disconnect between their managers and engineers understanding the psychology of their grocery store customers. Whole foods doesn't have a problem with digital technology, they just don't seem to know how to provide value to customers and yuppies are a limited niche market, but also a limited niche market where the consumers are ultimately suckers for value over status like anyone else and that's why Kroger will always win.

I'm speaking now as an every-day consumer, not a business analyst. That place is expensive as hell, for no reason except for yuppies paying a premium to shop among other yuppies. It's sad how expensive they are, for such a big box grocer. A LOT of grocery chains are going organic and being socially responsible. My God, ALDI's is now a major threat to Whole Foods! When I was growing up, Aldi's was like the bottom of the barrel! No different from Save-A-Lot. You had to put a quarter in the cart to unlock it and re-lock it to get your quarter back, just so they could prevent homeless people from stealing the carts! Aldi operates in the hood and if Whole Foods wants to generate more revenue, they should be reaching out to poor people which is a largely untapped market for them, it seems. However, with Aldi (and Kroger) already being established in the hood, do you think poor folks would ever go out of their way to shop at Whole Foods which is only established in rich neighborhoods that aren't easily accessible by public transit? They probably just don't feel comfortable in there. The beauty of Kroger is that they know how to cater to the local/neighborhood market. They adjust with each store and they typically have 'something for everybody.'

 

The Aldi family is expanding in the US in two ways: Existing Aldi stores are offering more upscale products, and Aldi's discounted sister chain, Lidl, is expanding significantly in the US, starting in the East.  But Aldi still does operate largely in lower-class areas and they even still have those carts with the quarters.  Those aren't just to prevent theft.  They're to eliminate the need for cart handlers.  The quarter makes people return the carts to the main store building.  Aldi wages can actually be quite high for the grocery sector, especially for cashiers compared to other places, but the secret is that they generally have fewer employees overall.  No specialty counters (deli, butcher, bakery, etc.), and generally only 3-4 checkout lines where a Kroger might have 12 and a Wal-Mart might have 20-30.

 

Aldi saves costs with a lot of vertical integration--a ridiculous amount of products stocked at an Aldi will be house brands compared to a Kroger.

 

No matter who buys Whole Foods, Whole Foods is going to die unless they become fundamentally different but the perceived value of Whole Foods is based on their current model and reputation so that's why I say Kroger should stay out of it and continue to eat them alive.

 

Amazon is just being reckless and getting into something they know very little about because they can afford to do that.

 

People have generally not fared well betting that Amazon was expanding too fast and unsustainably, or was recklessly moving into markets it couldn't compete in.  It did have a flop with the Fire Phone, for example, but has more than made up for it with the Echo, Kindle (and Kindle Fire), etc.

 

That said, yes, Whole Foods was struggling.  Amazon's offer of $42/share is a substantial premium over their recent closing price in the low $30s, but still quite a discount from a year or two ago when Whole Foods was somewhere in the $55 range.  The question, as with basically any merger, is whether Amazon can do more with Whole Foods than Whole Foods was able to do with itself.

Amazon was recently granted a patent that prevents shoppers from comparing prices online, inside brick and mortar stores. Wow...  They were granted the patent shortly before they announced that they would buy Whole Foods.

 

What other wonderful technological innovations will they think of next?

 

 

The Washington Post reported yesterday that Amazon has recently been awarded a patent which could keep customers in its new retail locations from comparing online prices for products while there-- something which, in the past several years, would traditionally be done on Amazon itself. Known as 'mobile window shopping,' the practice has allowed many consumers to get a real-life feel for products in retail locations before ordering them online for less, and has helped cause a "worrisome decline" for brick-and-mortar businesses, according to the Post.

https://www.forbes.com/sites/janetwburns/2017/06/18/amazon-patented-a-tool-to-prevent-the-price-comparisons-that-grew-its-empire/#5c36e274dfad

 

They patented a technology that prevents you from looking up prices online while you're in a brick and mortar store. That's actually pretty genius. They didn't register that patent so they could use it themselves.... they got it to prevent other brick and mortar stores from doing the same thing. So Walmart can't prevent people from loading Amazon while they're inside a Walmart.

They could certainly use it at Whole Foods, though. Or whatever brick and mortar stores they plan to take over in the future. They'd benefit on both sides of that. Although, there would be a huge backlash once customers fall victim to that. I'm not sure if they realize that or not.

Amazon's patent is kind of odd. It only works if you're using their in-store wifi. Who does that? Does Wal-Mart even have wifi? Does Kroger? If they do, they could just simply block any and all of Amazon's websites. I assume most people just use their own data rather than unsecured public wifi, anyway. I know stores that were early adopters of in-store wifi, like Nordstrom, we're doing all sorts of shady things with it like tracking how much time you spent in which areas, routes you took through the store, etc. They don't care if you use it for price comparison because they get all sorts of valuable information about your habits and routines that prior to cell phones they could have only dreamed about. Most stores can use the fact that your cell phone is constantly pinging for wifi networks to track you even if you aren't using their network. If you shop somewhere frequently with an in-house credit or loyalty card, they can match you to your wireless device with rather uncanny certainty.

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Amazon's patent is kind of odd. It only works if you're using their in-store wifi. Who does that? Does Wal-Mart even have wifi? Does Kroger? If they do, they could just simply block any and all of Amazon's websites. I assume most people just use their own data rather than unsecured public wifi, anyway. I know stores that were early adopters of in-store wifi, like Nordstrom, we're doing all sorts of shady things with it like tracking how much time you spent in which areas, routes you took through the store, etc. They don't care if you use it for price comparison because they get all sorts of valuable information about your habits and routines that prior to cell phones they could have only dreamed about. Most stores can use the fact that your cell phone is constantly pinging for wifi networks to track you even if you aren't using their network. If you shop somewhere frequently with an in-house credit or loyalty card, they can match you to your wireless device with rather uncanny certainty.

 

There's a very good chance that people will simply be using Amazon/Whole Foods' open network connection, entirely unbeknownst to them when they're in the store and curious to check on their phone for better prices online. Most people don't know how to manipulate settings on their smart phone and simply don't ultimately care enough about it or will even have the problem solving skills or drive to achieve and implement those basic problem solving skills, to figure their way out of that sort of a block, while they're in a retail store. If Amazon knows anything about grocery store consumer behavior, I guess they know this. The average consumer simply sees a webpage stating that they've attempted to view a webpage from a competitor and that they're unable to access it at their current location. I really do picture most folks simply giving up instead of figuring out how to manually disable their wifi-data while enabling only the 3-4G connection through their phone provider in the Android settings . The users just going, "Ugh. How did they know I was trying to compare prices!? Friggin' internet magic with software coding. Oh well. I'll just buy this sh!t here." 

 

Although I'm sure what's more likely to manifest on the resulting screen after a price comparison search is some incredibly vague statement or error code that looks like absolute meaningless jibberish, after the user's request to said competitor's website was sent. Most people simply aren't going to look into it any further. No doubt, you can expect almost zero inclination from the users to actually Google said obscure error code and access informative message boards that would allow for them to figure out what the error code means and how to bypass it to give them the freedom they deserve, as a consumer.

 

I do see a lot of benefit of brick and mortar stores, as mentioned above but I simply don't believe in denying consumers access to information on the web. It just isn't right. Ultimately, I'm confident  folks will see the light but it's sad that it will take a while before most people can comprehend what's going on with Amazon.

 

Back to resolving the issue of blocked web service:  that would take like 10-40 seconds of your time to fix a problem and who has time for that? Performance in web app response time is typically measured in milliseconds. Consumers actually notice differences in milliseconds and people definitely don't have time to spend actual seconds anymore to research and achieve their goal of obtaining valuable information, especially when it requires critical thinking and real actions from the user, based on critical thinking. It's really sad. Twitters success is almost certainly attributed to it's 140 character limit.

 

When I went to coding boot camp, my instructor spent 8 full hours explaining network administration and although I'm not a Network Administrator and it's far beyond my forte,  I can tell you that what I learned was pretty d@mn weird and eye-opening. He showed us how to use programs as a network administrator to obtain a lot of personal data from devices connected to the network you're overseeing and how to see all of the requests sent to and from devices connected to said private network - which gives you a lot of information about the users within the network and their web activity. To be honest, I'm not sure why that was even part of the curriculum - it didn't seem to have much to do with coding, particularly- the back and front-end languages we were learning - but he snuck that in there becauase he felt the need to inform us of a very real, although dark, very pertinent side of IT, as he did with a lot of hacking tools that he felt we should be made aware of.

 

I've been way too lazy and relaxed about getting proper security on my smart-phone; I really need to get "Wifi Assistant" for Android. After just now digging deeper into my phone's WIFI settings, I discovered that I have some pretty remarkable and shocking 'saved networks' (open networks that I've never even intentionally connected to but managed to connect to, none-the-less and will always auto-connect to, when I'm nearby. I've been apathetic about changing and never addressed.

 

McDonalds and Brueggers to name a few. I don't even like bagels; I went into Brueggers literally one time just to use their bathroom because I really had to take a p!ss. McDonalds - I went in there a couple times in the past year to get a smoothie but before I found out that they're not real smoothies and I know for a fact that I've never actually actively used the internet while in there. Yet I've connected to their network and have their network saved on my phone and will always auto-connect to them when I'm nearby. My device is simply programmed to use default factory settings which constantly sends probing requests to potential nearby open WiFi networks with the ultimate goal of finding an open network that allows for free data transmission to alleviate the burden from my data plan (as smart phones are constantly sending and receiving data for numerous reasons.) Fact is, I don't really care about data usage; I personally spend less than $40 a month for a crap ton of 4G data (more than I need, despite watching a lot of YouTube videos and listening to a lot of music) when I'm outside of using my own secure, home network and even if I were to deplete all of my allotted 4G data, I'd still have unlimited 3G which isn't as fast but eventually gets the job done.

 

One thing I'll say in Kroger's defense is that although they pioneered the collection of consumer data through loyalty cards, people are at least aware of what's going on and know that ultimately they do get savings out of the deal - by giving up their data. They do get quality, they get good prices on products and ultimately savings. I don't know what the hell Amazon is up to and like I said, I'm not a real business analyst but speaking as a consumer, I just know this isn't a good move for Amazon of consumers. I don't like it and  I don't trust what they're up to; I  have a hunch is sneaky and deceptive and don't trust where it's headed. I don't believe they're ultimately going to be successful with acquiring Whole Foods. I believe in the power of a consumer-driven society and I just don't trust Amazon, knowing what I already know. I also don't think Whole Foods is capable of producing nearly as much value for consumers as a company like Kroger or Aldi. I'm confident many other people feel the same way or at least will soon enough.

An analysis I read last night in the Dispatch indicated that Whole Foods admitted that they can't really expand much more months ago. That's why their shares dropped at the time.

Why the hell would Amazon buy a company that clearly can't grow much more? I never cared about Whole Foods before but I'm really wondering what Amazon has up it's sleeve.

 

IMO, their best growth strategy (and Amazon certainly has the money to do this) would be to hire lobbyists and put money into campaigns for politicians in Washington with the goal to have the definition of USDA Certified Organic, changed. I've heard that all these companies who are going organic are getting by from the skin on their teeth with calling things organic. They could also start a massive online smear campaign against the phony organic stuff. If Whole Foods really does uphold higher standards, it seems that would be their best bet for growth. No one knows where the hell their food comes from and what all was involved in farming it. It really is a lot of work to look all that up. All we know is that two comparable things labelled organic at Whole Foods and Kroger have a major price difference and we don't like the higher prices.

 

Ultimately though, I don't think people care much about the actual standards and methods of farming. They buy what is labelled healthy to feel good about themselves. It's just as psychological as it is physiological. It's like how I eat zucchini fries instead of potato fries. I'm eating zucchini so I feel good about it but I'm still eating processed food that was breaded, drenched in fryer oil and therefore tastes just like regular fries but I chose the healthier option!

 

Everyone loves Kroger! 

 

Yeah, I disagree with this statement. Are there any Wegman's opening in Ohio? Kroger's really doesn't stand a chance against them. I'm not a huge Wegman's fan either. Surprised they're even considering trying to go against them on the East Coast with the standard Kroger's product. Unless the idea is to expand Harris Teeter. That would make more sense.

Why the hell would Amazon buy a company that clearly can't grow much more? I never cared about Whole Foods before but I'm really wondering what Amazon has up it's sleeve.

 

Amazon may not need Whole Foods to grow much more as an organic grocer, not if they can grow their grocery business in entirely new dimensions rather than just expanding store count and improving same-store sales YOY.  If they're serious about home delivery (possibly even drone delivery), though, they just acquired 450 reasonably spacious launchpads, not to mention plenty of spaces for local pickup, which they'd previously been renting or buying dedicated space for.

 

That said, while I'm definitely not as hostile to the Amazon purchase of Whole Foods as you are (and certainly on the completely opposite pole as you when talking about Amazon generally), I'll still say that as a shareholder with an above-negligible percentage of my net worth invested in Amazon, I think Amazon might have overpaid for Whole Foods and I'm not 100% sold.  But I've ridden Amazon from the low $100s to above $1000/share (and bought more in just about every decile between $100 and $900), and I've learned to give them the benefit of the doubt until I'm much clearer about my doubts.

Why the hell would Amazon buy a company that clearly can't grow much more? I never cared about Whole Foods before but I'm really wondering what Amazon has up it's sleeve.

 

Amazon may not need Whole Foods to grow much more as an organic grocer, not if they can grow their grocery business in entirely new dimensions rather than just expanding store count and improving same-store sales YOY.  If they're serious about home delivery (possibly even drone delivery), though, they just acquired 450 reasonably spacious launchpads, not to mention plenty of spaces for local pickup, which they'd previously been renting or buying dedicated space for.

 

...

 

This is what I think people here are underestimating about this purchase.  Amazon didn't buy WF for their grocery prowess or their ability to continue to grow, they bought them as a distribution platform.  And the only thing that Amazon doesn't distribute well is perishable goods.  But instead of trying to create an entire network to move and store these goods they bought one.  And can now exploit it with the full purchasing power of Amazon.

Why the hell would Amazon buy a company that clearly can't grow much more? I never cared about Whole Foods before but I'm really wondering what Amazon has up it's sleeve.

 

Amazon may not need Whole Foods to grow much more as an organic grocer, not if they can grow their grocery business in entirely new dimensions rather than just expanding store count and improving same-store sales YOY.  If they're serious about home delivery (possibly even drone delivery), though, they just acquired 450 reasonably spacious launchpads, not to mention plenty of spaces for local pickup, which they'd previously been renting or buying dedicated space for.

 

That said, while I'm definitely not as hostile to the Amazon purchase of Whole Foods as you are (and certainly on the completely opposite pole as you when talking about Amazon generally), I'll still say that as a shareholder with an above-negligible percentage of my net worth invested in Amazon, I think Amazon might have overpaid for Whole Foods and I'm not 100% sold.  But I've ridden Amazon from the low $100s to above $1000/share (and bought more in just about every decile between $100 and $900), and I've learned to give them the benefit of the doubt until I'm much clearer about my doubts.

 

We're not on opposite poles. That makes sense. I'm just a critic of everything, even when I have no right to be. I don't have any particular grudge against Amazon; I just say what's on my mind because I know it spurs good conversations on here.

 

I guess I wasn't thinking about launch pads and using the stores for distribution and home delivery. They're going to need to buy brick and mortar somewhere, for those purposes.  Perhaps WF stores are also a good central location for their consumer base. You need good central locations for distribution and that certainly also applies to home delivery from drones that I'm sure are costly to run; the smaller the radius, the more efficient. The whole drone thing just seems so distant in the future, though. It's hard to believe that drone delivery would even be financially feasible considering how much they would cost to build and maintain - especially for drones that are capable of carrying such heavy loads. We're still far away from having self-driving cars as the norm. I know next to nothing about how air traffic control works but I know drones are a recent technology where there isn't much in the way of legislation regulating safety standards because drones just aren't used much commercially. Extremely small ones (that don't pose much of a risk from collision) are used for sport and photography or video. Other than that, they're mostly used in the military.  It's not feasible to have a bunch of certified pilots controlling unmanned aircraft remotely; Amazon would have to develop software that allows the drones to make it safely to a destination and back, relying on GPS but also program the drones to recognize every potential obstruction and take proper actions accordingly, similar to what self-driving cars do. They need to recognize shapes, colors, distances, all sorts of patterns. That would require so many years of testing and it seems that there would be so many legal hoops. How many people know how to repair commercial drones? What sort of certification is involved in that, to ensure safety - so that a drone doesn't fall from the sky or is the reason that my obituary states my cause of death was being hit by a bag full of potatoes and oranges that fell on me? They better initiate a huge training program for that. How far along is Amazon in developing this? It just seems way too early to be concerned about launch pads. I don't know a whole lot about Amazon and what they're up to, though.

We're a lot closer to self-driving cars than you think, and drones actually probably pose less of a safety risk to human health than those, not more.  In terms of the loads drones would be able to carry, remember that they wouldn't need to be able to carry as much as a UPS delivery truck or even an average car.  A lightweight drone capable of carrying just 70 lbs (a frequent number used in the physical requirements for package delivery) would be able to do a great deal of work if it could be run cheaply enough, because it could run 24/7 (granted some grocery deliveries wouldn't quite work at 4 a.m., but some would).  But you're right, that's farther in the future.  But AmazonFresh already exists in several markets and now will be able to expand very rapidly into any market served by a Whole Foods.  In-store pickup is also obviously an area that Amazon will be able to offer very quickly using its own online platform and Whole Foods' stores (many grocery stores are already moving in this direction with their own platforms, but Amazon has a massive preexisting user base used to their platform--I don't need to learn the Giant Eagle platform or create yet another account for it).

So are these drones going to drop bottles of ketchup and cheese wedges right down your chimney?  Are people going to retrofit their homes with roof funnels that allow this crap made in China to drop down a tube right onto their beer guts?