Reports that Amazon plans to open a new chain of grocery stores separate from Whole Foods is especially threatening to consumer goods manufacturers that would increasingly be competing with Amazon’s private-label brands. CPGs must build more relevant brand equity to survive.
The Wall Street Journal reported last week that Amazon, which in 2017 acquired Whole Foods, is aiming to broaden its reach in the grocery industry by opening its own grocery stores. These stores would be separate from the Whole Foods brand, have a wider range of products and potentially offer lower prices than Whole Foods currently does, which would help create distinction between the two chains.
While there are a lot more questions than answers at this point, it appears that this move is less about Amazon’s ambition to grow its grocery market share and more about embedding the brand in our daily lives and collecting more of our data. The new chain will be an effective vehicle for Amazon to move its high-margin private-label goods, which the company has been quietly building up behind the scenes.
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