The Wall Street Journal article entitled “At Whole Foods, Amazon Takes Rare Lead in Cutting Prices,” described how Amazon.com cut ticket prices on many Whole Foods Market items by more than 30%. Amazon generally looks at other retailers’ prices before lowering their own, but instead, Amazon slashed Whole Foods prices before checking other retailers. The article stated that the price cuts can be partly attributed to a “marketing stunt to mark Amazon’s [recent] ownership of the chain.” A concern of investors in Whole Foods is that the price cuts will trigger a price war led to a stock selloff among traditional grocers a few weeks ago. This article relates to two of Mankiw’s Principles: rational people think at the margin and people respond to …show more content…
One example of thinking at the margin would be Amazon selling Whole Foods products for less before examining to make sure they are selling for the best possible price. Amazon typically relies on collecting data that files competitors’ prices before lowering their own prices. By doing this, Amazon has the reputation of having the lowest prices, which is why the website is so appealing. Now that Amazon has Whole Foods Market, they have decided to ditch that approach for the time being, and price their items before comparing to other grocery stores. Another way Amazon is thinking at the margin is by not selling their products for as much, in order to offer structure to Whole Foods’ prices in the different regions of their stores. Whole Foods has twelve regions of stores and is a fairly expensive grocery store. The regions do not have consistent pricing, which can be a turnoff for consumers. With Amazon lowering prices on some items, they are lowering the prices in all of the regions, which is giving the stores an appealing uniformity. A Chicago customer stated, “This will make me come more,” which highlights the idea that these consistent price cuts are …show more content…
One incentive that Amazon responded to was being able to lure in shoppers. As stated in the previous paragraph, Whole Foods is an expensive grocery store, and therefore can be unappealing to many shoppers. Amazon is responding to the incentive of gaining more customers by cutting prices. Customers who have been entering stores have been greeted by signs marking lower prices. This leads to the next incentive hinted in the article: customers are responding to the incentive of better quality groceries comparable in price to ordinary stores. At a Whole Foods in Chicago, “some of the steepest cuts were in the fish and meat department, with rib-eye reduced to $13.99 a pound from $18.99 and salmon fillets dropping to $9.99 a pound from $12.99.” Because of Whole Foods’ standard of high-quality products, customers may respond to this incentive of better food for less. Another example of these incentives is Amazon’s tactic of selling their own products in Whole Foods stores at lower prices. This is a combination of Mankiw’s marginal thinking principle and responding to incentives. A couple of weeks ago, Amazon sold their Echo speaker in Whole Foods stores, discounted at $99.99, rather than its usual price of $179.99. Although Amazon could technically be losing money, customers may buy the Echoes at higher rates than they would at its usual price point. The article
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
The food market business is usually a difficult one, but online retailer Amazon's proceeding to purchase high-end chain Whole Foods changed the landscape. The new corporation is currently reducing prices, as well as Amazon is managing to reduce costs by taking its online expertise
One of the benefits from having low prices is that customers tend to migrate to the store that offers the cheaper products. Low prices and happier customers will have a positive impact on ALDI’s sustainability. Competitors that offer substitute goods are a step behind ALDI’s lower prices. However, because other companies such as Wal-Mart and Target, who are large corporations that have their hand in thousands of areas around the country, also sell products that are similar to what ALDI sells, ALDI is still faced with a
Additionally, ‘extreme value’ retailers also impact the rivalry among competitors. Recently, Target, Kroger and others have added dollar sections and major bargains to their format. Price sensitive consumers are attracted to the dollar store grocery deals; also, discount stores such as the 99 Cent Only stores compete on perishable items, such as produce and dairy. They seem to be affecting the supermarkets market share, as described in Retailing in the 21st Century:
Comparing my shopping experience at Whole Foods verses Walmart, I have always had positive experiences at Whole Foods. I admit at first I was hesitant to shop there because I thought their prices would be too high or that they wouldn’t have the items I was accustomed to purchasing. My first experience was shopping for lip balm. I was told they sold a brand that didn’t include camphor phenol and that was important to me. Being that I never shopped in Whole Foods before I immediately asked for assistance in finding the right isle. Not only did they direct me, they walked with me and asked what I was looking for, they showed me the product and even gave me useful information regarding the lip balm. Since that day I have been back many times, not only for lip balm but for a variety of groceries and products. Whole Foods staff is pleasant, enthusiastic and extremely helpful. They are well trained on their merchandise as well as customer service and seem to genuinely enjoy interacting and working at Whole Foods. In addition,
Not many companies have the same track record and this proves that Whole Foods is in it not only for
One of Amazon’s main focuses is to create value for it’s customers. To do this, their number one strategy is to exceeding customer’s expectations. Amazon does a lot of little things very well. These little things are often overlooked by other retailers and, as a result, create customer loyalty for Amazon.
Amazon is remaining steady to its model and is still providing goods at a low price, and providing their deliveries in the shortest amount of time. Amazon maintains the practice of making sure that every product it sells turns a profit. However, the debate lingers especially with investors who are expecting a return on their investments. The chief executive of Forrester Research George Colony stated in a New York Times article that “At some point, the piper must be paid.” How? “By raising prices. I don’t see any other way” (Streitfeld, 2013).
Store Operations/Incentives: From an internal perspective, Whole Foods uses a team-based strategy of operations. Employees are part of a democratic process of selecting new hirees, implementing new ideas and encour...
Amazon’s main competitors are Wal-Mart Stores Inc., Apple Inc., eBay, and Alibaba Group Holding Limited. Many of their current and potential competitors have greater resources, longer histories, more customers, and greater brand recognition (2015 pg.4). They may secure better terms from suppliers, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing (2015, pg.4). Amazon is aware of their competition and is being competitive themselves. Amazon offers an annual membership fee for free two-day shipping, free movies, free kindle books, unlimited photo storage, and free music called
To most consumers Whole Foods is known as a chain grocery store specializing in organic and natural foods. Some may go as far as say the name is synonymous with quality. This comparison is the result of Whole Foods’ marketing their brand successfully to consumers demanding their specialized foods. As with any organization, Whole Foods may consider evaluating their strategic objectives and decide if necessary course corrections are needed to reach their objectives and goals. Through a fundamental and technical analysis, I will discuss Whole Foods’ mission, vision, and goals, their competitive environment, and some factors within their strength, weakness, opportunity, and threat analysis. With such data and information I will recommend, if needed, and strategic changes in order to sustain a competitive advantage.
Oliver’s market competes with rivals by its pricing strategy. They set their everyday prices on traditional grocery items eight to ten percent below Safeway’s prices. They also price its natural foods just below Whole Foods. Beside that they use promotion and advertising as another weapon to compete in the market. They have a Direct to You program that offers a ten percent discount to seniors on Wednesdays before 4:00 p.m. They also have a staples program which compares prices to Safeway for everyday items.
Another part of Amazon’s retail strategy is to serve as the channel for other retailers to sell their products and take a percentage of cut of every purchase. Amazon does not have to maintain inventory on slower-selling products. This strategy has made Amazon a ‘long tail’ leading retailer, expanding its available selection without a corresponding increase in overhead costs.
...old these elements constant, the estimate Amazon’s stock price should be $286.41 to $387.2. Thus, holding other elements constant, the lower the WACC, the higher the stock price. Amazon should lower its cost of capital to maintain or increase the stock price.
The mission statement states that they go beyond providing healthy foods to the world. They deliver the best quality and value to each of their customers, and they ensure individuals' standards are met, and exceeded when providing service. Their core values include providing the best natural and organic foods to nourish the customers, providing happiness and excellence to all team members, and promoting wealth where stores are located (Whole Foods Market, 2018). These simple values along with protecting the environment and having a win-win situation with their suppliers make Whole Foods Market a great company. These statements of values and excellent qualities are created and enforced by management. Management is responsible for the customers satisfaction, and are also responsible for the goals, and visions of the company. Whole Foods Company has many individuals as part of their leadership team, which is important to have multiple opinions for production. "Whole Foods Market consists of twelve regions, each with its own president, regional administrative team, store-level leadership, and store-level team members. A 4-tier hierarchy of employment exists within the Whole Foods Company: Store Employment, Facilities Employment, Regional Offices, and Global Headquarters"