Consumer packed good companies will be the most at-risk sector, Deutsche Bank’s Lloyd Walsmey said in a research report. CPG companies lack the vital direct access to customer data that Amazon has and the online giant could decide to “cut-off the flow of this data” to companies.
Doing so would give Amazon a notable advantage in which it can move more quickly in filling product gaps, the analyst continued. Amazon can also use the data to accelerate Whole Foods’ private brand sales within the fast-growing natural, organic and healthy space, which has been a key focus for CPGs as of late.
Last Mile Delivery
The experts expect Amazon to leverage Whole Foods’ stores and its logistics expertise to improve last mile delivery economics. The future of Whole Foods could consist of both grocery items and higher margin non-grocery items coupled with store automation to improve store-based economics.
Over the longer term, Amazon is expected to “re-engineer fulfillment” and distribution outside of the store footprint.
Not Much Clarity On Stores
Amazon will be experimenting very early with new designs and ideas on the storefront, including automated checkouts, Alexa devices placed throughout the store to help customers and non-grocery product offerings.
But Amazon’s ultimate end-goal would likely be turning stores into “centralized distribution centers for groceries” but “we err on the futuristic side given Bezos thinks big.”
Company Commentary
- Kroger Co KR 0.99% may be best positioned to counter Amazon’s threat given its own data analytics capabilities.
- SYSCO Corporation SYY 0.42% and US Foods Holding Corp USFD 1.14% are likely safe as Amazon won’t move into the foodservice distribution space which is very different from serving individual customers.