Grocermageddon Goes Global

Tyler Durden's picture

Well that escalated quickly...

This morning's Amazon acquisition of Whole Foods Market has collapsed share prices of many grocers (in US and around the world), pharmacies and drug distributors, and even REITs...

First things first, 11 of the top 12 biggest losers in the S&P 500 are related to AMZN's move...

 

It's a bloodbath in US Retailers...

 

But it's not just US Retailers... European Grocers are crashing too...

 

And away from Grocers, Supermarket-anchored REITs Kimco and Regency Centers lead S&P 500 real estate index lower, with KIM down as much as 4.6% and REG down as much as 4.2%, the largest decline for both since November...

 

And Pharmacies and Drug Distributors are also tumbling...CVS -4.7%, WBA -4.5%, ABC -1.9%, DPLO, CAH, MCK all down 1.7%, ESRX -1.4%

“The deal put everyone’s business models at risk,” Bloomberg Intelligence analyst Jonathon Palmer says in email, “large drugstores are trading down in sympathy but the declines are less steep than those seen in supermarkets,” as pharmacy is seen as more complicated with more regulation; would be more difficult to enter.

 

Amazon’s foray into the retail sector doesn’t change much for PBM pure-play Express Scripts but he sees “higher risk” for distributors from their end customers.

Finally we note that the divergence between the S&P 500 and Retailers has never been this large as correlation collapses...

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Squid Viscous's picture

If i was a target shareholder, I might be checking when Bezos next softball practice is,

BaBaBouy's picture

Everyone, all together Now :

Hail Our Supreme Chief and Illustrious Leader and Provider...

cowdogg's picture

Bezos doesn't own or run Amazon. It is a CIA operation.

blue51's picture

1 Bank , 1 grocer , 1 automaker, .....

Muddy1's picture

It is easier to control the population when you control the food supply.

"We Are the World", Stevie Wonder, etal, yes the world responded with food shipments that were kept on the docks and in major cities.  People were forced to migrate from rural areas into the major cities to get food and medical attention.  The rural areas were depopulated, and the masses controlled.

eclectic syncretist's picture

since the bezos postmeister took it over they will have to rename it asswhole foods

Ghost of Porky's picture

At least he's not building a solar-powered electro-pneumatic tunnel to Mars.

AllOfGood's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Antifaschistische's picture

the constraint is not the checkout line.

The constraint is that I have to drive to the grocery store, find a freaking parking space....get hearded through a stupid store where the only three things I want are at the very back of the store....at this point, I've walked 250 yards.  Now I have to walk back out to my car.  I exercise regularly....but I don't want to combine that and grocery shopping.

I want to sit at home in the evening, buy 7 items online, and have them delivered to me within the hour.  I'm okay with a requirement that I be home between 8-9.  It's more efficient for someone to deliver my groceries and the groceries for 9 other people at the same time.  One car, 10 deliveries.  Food says cool.

If the retailers got hammered today it's their fault for treating customers like cattle that get hearded through their stores.  I refuse to participate in that experience.

CPL's picture

= squirrel bacon. 

Squid Viscous's picture

the butcher the baker and the candle stick maker,

and the jew banker,

GatorMcClusky's picture

Eine Reich. Eine Führer.

waspwench's picture

Didn't there used to be something called the Monopolies Commission - or something like that - and didn't it used to be responsible for maintaining a degree of competition in the business world?   Well, I thought there was.   I must have misremembered.   Silly me.   Why ever would we have needed anything like that?

blue51's picture

Anti-Trust Laws , Sherman Act. , and the Clayton Act. , can ONLY be found in the rear-view mirror .

Funny screen name - waspwench . +100

garypaul's picture

I don't understand any of this at all. Whole Foods is just a minor player with a controversial reputation. Amazon is never going to dominate groceries (drone-deliver my milk??), although with his money, he could throw it around and affect other companies for a little while.

What is the meaning of all this? (I say it a sign of major economic problems)

 

Zero_Ledge's picture

Cramer: "This is food deflation.  We are going to pay so much less for food. I paid like $5 for a gallon of milk.  THAT'S OVER! "

Hahahahahahahaha.

 

Squid Viscous's picture

but geveltefish will still be $7 a jar Jim,

too many hebes between you and the fish

Rabbi Chaim Cohen's picture

The dirty evil Jew bankers and heads of industry that you hate don't generally eat Jewish soul food. They eat out at expensive restaurants eating things like tapas, caviar, shellfish and tenderloins that look like a small birthday cakes.

The people eating the gefiltefish are more likely to be the ones very quietly tithing 20% of their income and praying 3 times a day to the God of Abraham, Isaac and Jacob.

I would suggest a bit more research to back up your generalities, otherwise people might think you're ignorant or something...

It's usually spelled "heebs", btw. Ever listen to NoFX? "White Trash, Two Heebs and a Bean"? Good album.

Squid Viscous's picture

the God they adopted in 800 AD Khazaria?

do YOUR research clown, and not the kind you can find in the library or wikipedia,

hint: the pale skin and blue beady eyes don't come from "Palestine"... maybe start there?

 

 

 

PrometeyBezkrilov's picture

Bingo! Add to that Black Beaver hats in Palestine. These are possibly from instinct desert beavers. :-)))

yrad's picture

My wife and I have been cooking Blue Apron for 3 years. I go to Wal Mart once a month vs once a week. New normal.

Squid Viscous's picture

nice that you can spend $300 a week on dinner,

new normal, until it's not

CPL's picture

7!  Too low....$40 a jar now.  Stop subsidizing their fucking food already.

Mr. Pain's picture

And those jobs in the food industry will be low paying so Bozo can make several billion more. Fuck him. Break up his company!

animalspirit's picture

End software patents and protecting "business ideas" as intellectual property, and you'll break up his company.

gold rubeberg's picture

Those things weren't considered patentable before sometime in IIRC the late nineties.

MilwaukeeMark's picture

Two things at play here ..

1)  Bezos cannot leverage his current model of warehousing/distributing food because it is perishible. Grocery profits are slim (2-3%) so any unmanaged watse can quickly eat up your bottom line. He needs to leverage brick and motor locations for any future Amazon delivery service where rotation and variety of offerings is already factored in. That's Whole Foods (aka: Whole Paycheck) whose usual bottom line is somewhere between 5-6%. If Amazon can drive up volume those %% will fatten 2-3% because overall waste in the grocery segment can be 5-10% of sales.

2) There is a huge shake-out coming to the restaiurant sector as people cannot afford to eat out as regularly. That will drive people back into the grocery stores to try to replicate their dining out experience at home but at 1/3 the cost, AND no tax and tip. So the grocery segment is where you want to be positioned in food, not the restaurant sector. People have to eat, but they also have kitchens at home. For too long the grocery stores have stood by and allowed the restaurant segment "to eat their lunch". (Bad pun sorry)

adr's picture

Most people eat out because they don't know how to cook.

I don't want groceries delivered because I want to pick them out in person and I buy generic store brands most of the time.

What is Amazon going to do about frozen items?

Delivering $20 worth of groceries four times a week to the same person is a losing business proposition any way you look at it.

 

The grocery delivery model doesn't work if scores of people start using it. Can you imagine the trucks you'd need?

I guess people can start suing Amazon for food poisoning though, which would be great.

Arnold's picture

Ask these guys.
They have been delivering to the hood as long as I have been here.

http://www.schwans.com/landing/?id=thirty&kwid=search-Google-remarketing...

MilwaukeeMark's picture

Look .. I wasn't debating the viability of the model, I am only telling you, as someone in both sides of the food business, I understand where the synergies lie with respect to changing demographics, economics and trends. If you are clever enough to seize them, then the future is your's.

Everything you said above could have more or less been said about Amazon at start up.

Who would buy a book before seeing it.  How can you deliver a $5 book, include freight and make any money? Can you imagine the trucks you'd need? 

Do you really think someone like Bezos would knowingly deliver food which causes food poisoning? The health departments (and 3rd party auditors) will require temperature standards and documentation, just like with the food delivered today to the stores. 

People who excel in this world are those who see a vision no one else recognizes. The rest of the world (like you) punch holes in it and later say, "geez, I wish I'd thought of that.".

Sick Monkey's picture

I agree with you that 30 years ago those who had vision eventually became leaders in thier domain but for that to be sustainible even visionaries must cash their chips. All in the timing. You will see a lot of strange deals this summer and it's not beacause of Trump. I mean really who in their right mind would want that job given the current debt levels globally. The one thing that is predictable in this game is that in this extremely leveraged digital environment vast sums are moving to places you have never heard of and trying to predict where it's going is like hitting the moon with a .22. Many unexplainible deals coming. The private poker game room is closed to the public.

1033eruth's picture

BS - Most people eat out because they are LAZY and/or they think that eating is part of the lifestyles of the rich and famous.  I don't know how often I've heard about people bragging about their $100 restaurant bill, etc, ad nauseum.  

Pausebreak's picture

Frozen foods shouldn't be a problem for Amazon sine they will be delivered by Drone.

Full Court Lugenpresse's picture

Exactly. Amazon barely makes any money with all their existing online retail; they have no special exerptise whatsoever in the intensely-competitive brick-and-mortar grocery space. Unless their plan is to just run a bunch of grocery stores at a loss (wouldn't surprise me) it's very hard to see how exactly they plan on disrupting this industry.

Winston Churchill's picture

Its the start of the Great Unwinding.

The scared money is rushing from pillar to post, next comes the exit door, but thats really an open elevator shaft.

peopledontwanttruth's picture

I'd say food shortages are on the horizon

Deep In Vocal Euphoria's picture

all a plan all a show....

 

top down control........

 

you ain't worth shit

Ghost of PartysOver's picture

If you buy from Amazon you are part of the problem.  

lil dirtball's picture

If you wake up in the morning and 'commute' to your 'job' - you are a bigger part of the problem.

http://www.cnsnews.com/news/article/terence-p-jeffrey/240418000000-feds-...

syzygysus's picture

And the methane and co2 being gassed out of each end....huge part of the problem!

kliguy38's picture

shocking.....but it was such a SAFE sector......BWAAAAAAAAAAA

Mr. Universe's picture

Costco down 7.5% and they already deliver from online. Amazon should have bought them, it's a much better fit for taking over everything.

1033eruth's picture

BTFD - Algos have gone crazy, they will self-correct.  

Amazon is not going to be able to fix WholePaychecks FAILED business model.  In fact, this purchase makes ZERO sense whatsoever.

williambanzai7's picture

Bullish on bullshit?

Squid Viscous's picture

If Bezos really had a sack he should buy UPS, but he's just a liberal pillow biting faggot,

 

new game's picture

ps. usps is delivering amazon prime. sundays too. open your eyes and see those sunday usps trucks and the peons scrambling to and fro...an army of ants delivering the future now...

don't fight it. brick and morter is going bye cept must go touch merchandise. even a car could be bought and deliverd to your driveway.

Squid Viscous's picture

usps delivers it at no cost for Amazon? what's your point?

too many mentally challenged on this site these days...

OKUSA's picture

Bezos is taking over the world. Who can stop him from buying governments?