Amazon can't reduce margins without fundamentally changing the nature of Whole Foods. If they lower margins they will leave their current segment and enter a lower cost segment, with the corresponding changes in service, offerings and overall customer experience. They could do it by subsidizing lower margins in the short but not the long term.
Re:The Amazon-Ification of Whole Foods
by Shivetya on Thursday February 08, 2018 @08:59PM
(#16337307)
There aren't enough of these stores to impact any major metro area. Aldi tends to have more storefronts and their impact hasn't been that great. What did smack the old school grocers was when Wal Mart got into the business years ago and to a point Target.
example, there less than ten Whole Foods stores in Metropolitan Atlanta. There are probably that many competing grocery chains in the same area, with sixty plus of each of the larger ones.
Re:The Amazon-Ification of Whole Foods
by Whiteskin_Kanye on Thursday February 08, 2018 @11:00PM
(#16337810)
In Detroit, a "food desert", they could potentially take over the majority of the downtown/midtown upper middle class grocery market.
At $100/yr, which includes video and app subscriptions, and shipping, Amazon can't offer too much in the way of discounts before the warehouse-club aspect is irrelevant and is just "competing on price"
They can likely cut Whole Foods' margins on many items and, through the magic of the warehouse club nature of Prime, offer further discounts to Prime members, incentivizing the choice of Amazon over their competitors. Not all people will we swayed, but some will.
This will shake up the grocery market in many metros, where margins are tight and incumbents are often saddled with tight margins, concerns about real estate, and preexisting debt. Some will spend more to retain customers with extra features like free at-store pickup or cheap delivery, but they won't be able to outmatch Amazon's warchest. The most vulnerable among their competition will fold, allowing customer bases to re-align.