Whole Foods’ Aldi Clone is a Major Opportunity for Amazon

This means that 365; and not the supermarkets, might be the real reason Amazon bought Whole Foods. Therefore both Whole Foods and the US grocery industry might be changed beyond recognition by Amazon and 365.

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Aldi wants to become Third Largest US Grocer

The German discounter plans to open 2,500 stores nationwide by 2022, Business Insider reported. That would make Aldi, America’s second largest supermarket operator behind Kroger (NYSE: KR) which operated 2,796 supermarkets and supercenters in 2016.

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Seven Threats to Costco

The available data indicates major changes in American lifestyles that bode ill for Costco. Statistics show that younger Americans are less likely to have a driver’s license, cook; data shows that Americans now spend more at restaurants than grocery stores, and are less likely to own a home (only 62.9% of Americans owned a home in 2016 the lowest level since 1965, Bloomberg reported). Costco’s business model is built upon the assumption that Americans will own and use a car; make most of their food purchases at a grocery store, and require home-maintenance supplies.

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Organics Generate a lot of Sales Growth, but no Cash or Income

Low margins and intense competition make both Whole Foods and Sprouts bad investments. Both of these chains will struggle to survive in a market filled with larger and far better capitalized rivals in the near future. My prediction is that either Whole Foods or Sprouts will enter the death spiral at some point before the year 2020.

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Ten Threats to Walmart

Much of Walmart’s success has been based upon its ability to deliver name brands at much lower price than competitors. This is threatened because Americans are no longer buying name brands. Three of the fastest growing retailers; Aldi, Costco and Trader Joe’s, base their business model on a limited selection of low-cost but high-quality private label products.

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Can Whole Foods Market Avoid the Death Spiral?

More importantly, Kroger has reported 49 quarters of same store growth as of second quarter 2016. One has to wonder how Whole Foods is supposed to be able to compete with that.

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Kroger Probably Will Not Bid on A&P

More likely, buyers for the A&P locations include Walmart Stores Inc. (NYSE: WMT), which is expanding the number of smaller locations it operates, and Target (NYSE: TGT), which is considering entering the small-box arena. Also likely to jump in is the fast-growing, privately-held Aldi Inc., which is aggressively expanding its discount grocery business in the United States. Aldi owns another fast-growing grocer: Trader Joe’s.

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