I ask will Sprouts survive because the discount grocer is expanding aggressively in an increasingly competitive grocery market. For instance,Read more
Sprouts’ dilemma is that Amazon is just one of its competitors. Besides Amazon sprouts has to compete with Kroger (NYSE: KR), Walmart (NYSE: WMT), Aldi, and Target (NYSE: TGT) to name just a few.
For example, Kroger has a close relationship with Instacart and it is America’s largest organic grocer. For example, Kroger sold $1 billion worth of organic produce in 2017, Progressive Grocer estimates. In addition, Kroger sold $2 billion worth of its Simple Truth organic grand in 2017, Progressive Grocer calculates.
Under those circumstances, I cannot see how Sprouts can compete and survive as an independent company. Instead, Sprouts’ future will be as part of a larger organization – such as Aldi Nord or Kroger.Read more
Delivery can destroy Sprouts because it keeps customers away from Sprouts where they can see its low prices.
Traditional supermarkets depend heavily from all the spur-of-the moment purchases from shoppers in the store. How many times have you walked into a supermarket to “grab a couple of things” and ended up pushing a full shopping cart out the door?
Online shoppers only get what is on their shopping list, because they are not in the supermarket to get tempted by that extra stuff. That is good for customers’ pocketbooks but bad for Sprouts’ bottom line.
The traditional supermarket is a marketing machine cleverly disguised as a food store. Grocers fill their stores with temptations such as endcaps, free samples, delis, and cafes. The online shopper sees none of that stuff.Read more
Giving Walmart workers an extra $8 or $9 a day might have little or no impact on the economy. Walmart clerks can now afford to buy lunch at In-N-Out Burger; rather than at McDonald’s, how does that benefit the wider economy? Much higher wages will be needed for a real economic stimulus.
It remains to be seen if the $1,000 bonus and wage hike will have any effect on Main Street. Giving average families an extra $1,000 to pay off $1,000 of their credit card debt, might not do much for the economy. The average U.S. household now owes $15,654 in credit-card debt, Nerdwallet estimated.Read more
The most obvious buyer for Sprouts would be Kroger, which has been aggressively trying to attract more organic and high-end grocery business.Read more
The next logical step at Target should be a strategy of acquisition. Other brands are cheap because of the retail apocalypse and Target certainly has the cash.
The best target would be an online retailer or the online operations of struggling brick and mortar retailers. An interesting acquisition for Target would be JC Penney’s (NYSE: JCP) online operations.Read more
The question we need to ask is: “what companies will Amazon acquire next?” Some probable candidates for Amazon acquisition include:Read more
Kroger (NYSE: KR) and Walmart (NYSE: WMT) are winning the grocery wars. Whole Foods Market (NASDAQ: WFM) has given upRead more
All this makes Whole Foods a very suspect investment even though its stock has done well. WFM investors received a return on equity of 13.69% on December 31. The company is scheduled to pay a 14¢ a share dividend on April 5, 2017. One has to wonder how much longer that can continue. Sprouts pays no dividend but its’ investors did receive a 16.07% return on equity on December 31, 2016.Read more
My take is that the major grocers; and high-end grocers like Whole Foods, will survive but many of the regional and discount chains will not. Instead of being a direct threat to grocers, Amazon will be an indirect threat taking some business and providing another headache for grocers.Read more