Abstract
Amazon serves as one of the fastest growing companies worldwide, especially in the area of e-commerce and cloud computing although it also considering venturing into other industry. Thus, the paper discusses how the buying on Wholefoods by Amazon affects the entire grocery sector. It reveals that firms in the industry are experiencing pressure in pricing, as most of them are required to reduce their prices significantly. Companies are also looking for opportunities for consolidation to cope with the growing pressure in the market. The paper also reveals that stakes in the e-commerce sector are growing together with the evolution of private labels. Additionally, it depicts that increased need for in-store technology also appears to be affecting the market. The paper concludes and recommends that firms wishing to realize success in the market should consider following in the footsteps of Amazon and its innovativeness to allow them to remain relevant in the market.
Introduction
Amazon serves as one of the fastest growing companies worldwide having tremendous influence in different business sectors. The company gained tremendous popularity owing to its specialization in sales via electronic as well as cloud computing. Owing to its tremendous growth recently, the company is planning to acquire purchase Wholefoods, an initiative anticipated to affect the entire industry tremendously (Treanor, 2010) . Within the U.S., the grocery business accounts for around $800 billion in yearly spending. With the existence of an online store that deals with groceries (Amazon fresh), the move by Amazon to acquire Wholefoods market appears as a revolutionary idea. Amazon anticipates purchasing Whole Foods for around $13.7 billion. Here, it is essential to note that in the event of the grocers, they are struggling to remain relevant in the growing competition, address the issue of inflation, as well as deal with the waging wars in prices. In this sense, the acquisition of Wholefoods (a pioneer in organic and natural foods) seems to depict a major shift in grocery retail, which has left many players in the industry what the broader influence will be (Wells, 2017) . Thus, the paper discusses the impact that the buying of Wholefoods by Amazon will have in the entire industry.
Delegate your assignment to our experts and they will do the rest.
Pressure in Pricing
Within the entire grocery industry, pricing pressure is a common story. For Amazon, entering the industry by offering lowest prices puts pressure on the other players to reduce their prices while at the same time acquiring their share of the market. The reach of Amazon with Wholefoods is anticipated to be limited, although the grocers operating in the organic and natural sector will witness a similar influence (Wingfield & Merced, 2017) . If Amazon decides to attack the “Whole Paycheck” image by Wholefoods, as most anticipate the firm will, tremendous reductions in prices will become apparent in the stores. Other grocers in the sector will witness pressure from the reduced prices, especially in the event of the specialty goods that considered as high-margin ones (Wells, 2017) . While this serves as a logical reaction, it might pose significant dangers particularly owing to the notion that a large number of supermarkets are already minimizing prices on low-cost and staple goods to allow them rival with firms such as Walmart and other discounters.
Extra Consolidation in the Industry
In the recent years, acquisitions and mergers have grown significantly particularly since grocers are looking for efficiencies and scale in an industry that is becoming increasingly crowded. The acquisition of Wholefoods by Amazon is anticipated to contribute to additional consolidation although the primary aim might be driven by the urge of diversifying as opposed to saving money (Obeng, Luchs, Inman, & Hulland, 2016) . Experts believe that regional as well as small chains will serve as acquisition targets, particularly owing to the strengths they portray in domestic markets as well as their comparatively low prices. In the event of large retailers, such as Target and Kroger, they might embark on purchasing organic and natural chains, such as the Sprouts Farmers market (Wingfield & Merced, 2017) . Such an initiative would serve as a safeguard against Wholefoods, which seems to be realizing increasing growth as well as its prevalence in the high-growth sector.
Raising E-Commerce Stakes
Since Amazon serves as the only online grocer, the company has struggled in ways in which it can advance its footprint past urban market collections. After being in operation for around 10 years, the Fresh service by the company is only available in 16 cities. With the stores of Wholefoods serving as its resource, Amazon might manage to add vital brick-and-mortar operations to the e-commerce ambitions in the grocery market (Treanor, 2010) . Most anticipate that Amazon might incorporate the click-and-collect initiatives in its stores, particularly in the suburban locations of Wholefoods, which are characterized by high traffic. Home delivery will also serve as a major area of consideration meaning that Amazon will manage to eradicate any inefficiencies to fulfill order requests, hence emerge as one of the key players in the market. In this vein, the efforts by Amazon in the sector will impose pressure to other grocers to dedicate more funds to marketing as well as establishing online platforms (Wells, 2017) . While such an initiative might pay off during the longer term, the platforms are presently inefficient and challenging to convert to profitability for a large number of retailers.
Evolution of Private Labels
A large number of analysts in the grocery market anticipate that Amazon will manage to grow Wholefoods’ 356 brands through financing development of in-stores while at the same time selling it to a numerous client base via Amazon.com. However, the online firm appears to show interest in private label with brands, including Happy Belly Snacks, Mama Gear baby food, as well as coffee, which appear to be gaining tremendous recognition on the website. Experts argue that the company might introduce such brands in the Wholefoods’ business. Furthermore, the e-retailer might utilize the expertise of Wholefoods to establish additional lines of private label. The two firms will manage to brand their distinct assortments that will allow them to build each other in the area of private label (Wells, 2017) . The fresh outlook, experimental spirit, as well as huge finances will create room for innovative brands that will pose challenges to other retailers in line with inspiring additional development in the present fast-growing industry segment.
Increased Anticipations for In-Store Technology
When Amazon announced that it would acquire Wholefoods, many players in the sector started reflecting on the technological revolutions the biggest worldwide retailer would introduce to various stores. It might be that Wholefoods might feature the free checkout technology, Amazon Go by the company. The technology features the delivery orders via drones using sensors that track clients while at the same time interacting with them while in the store (Obeng, Luchs, Inman, & Hulland, 2016) . Additionally, it is crucial to note that a large number of retailers are continuing to experience compression margins due to the growth of additional discounters. In this sense, the prospects of spending additional funds to acquire digital platforms as well as in-store technology to keep up with the competitiveness of Amazon appear highly unattractive. In the case of Wholefoods, improvements carried out in back-end systems will play a critical role with regard to boosting the profitability of Wholefoods during the short term (Wingfield & Merced, 2017) . Nonetheless, since data and technology expertise mostly drive Amazon, it is anticipated to introduce a technology that targets diverse needs of customers. For instance, the Prime members might receive recommendations from the e-retailer the need for integrating their in-store and online preferences, an initiative that will play a critical role in allowing the company to take advantage of Prime accounts, such as payment information. These will play an essential role in speeding up the checkout process while at the same time offering in-store specials (Wells, 2017) . Such moves will continue imposing increased pressures to market players, who will face challenges when it comes to competing with the Amazon and Wholefoods in the grocery market.
Conclusion and Recommendation
In conclusion, Amazon serves as one of the fastest growing businesses globally, particularly owing to its online presence. The company has decided to acquire Wholefoods to allow it expand its operations in the grocery business. The influence that the move has had on the industry comprises of rising pricing pressures, increasing consolidation in the industry, raising e-commerce stakes, contributing to the evolution of private labels, and growing anticipations for in-store technology. In this case, it is true that buying Wholefoods has significantly changed the state of the grocery industry while a large number of industry players have felt tremendous effects, most of which they cannot cope with to sustain their competitiveness. Thus, players in the grocery sector need to consider implementing approaches similar to those of Amazon to remain relevant in the marketplace.
References
Obeng, E., Luchs, R., Inman, J. J., & Hulland, J. (2016). Survival of the fittest: How competitive service overlap and retail format impact incumbents’ vulnerability to new entrants. Journal of Retailing, 92 (4), 383-396.
Treanor, T. (2010). Amazon: Love them? Hate them? Let’s follow the money. Publishing Research Quarterly, 26 (2), 119-128.
Wells, J. (2017). 6 ways the Amazon-Whole Foods deal could impact the grocery industry. Retrieved from http://www.fooddive.com/news/grocery--6-ways-the-amazon-whole-foods-deal-could-impact-the-grocery-industry/445600/
Wingfield, N., & Merced, M. (2017). Amazon to buy Wholefoods for $13.4. Retrieved from https://www.nytimes.com/2017/06/16/business/dealbook/amazon-whole-foods.html
