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Comment by alistproducer2 | Hacker News Reader

They should've bought Kroger if that was their intent. WF is too expensive for like 80% of the U.S population.

I disagree. The nice thing about WF is they have relatively fat margins, so that "margin space" gives Amazon a lot of room to operate. For example, they could provide cheaper delivery while still being profitable, just less profitable. Margins on traditional grocers like Kroger are so thin there is very little room to operate. With WF, Amazon could get a model that works and then work on making it more broadly applicable (like WF has already started doing with their cheaper WF 360 stores).

Yea but Amazon usually operates at lower and lower margins . Also, if you give the other retailers in the space they can adapt .

I see what you're saying but I still think a more accessible store with more economically diverse location (most WF were built where could afford to shop there) would've been a better move. It would've put Amazon in the heart of more communities. Remember Walmart started by catering to poor people and it turned out to be the right decision. I'm not so sure starting out catering to rich people is going to be the right decision in the long run.

It worked for iPhone.

you mean, carrier subsidization worked for the iphone.

No, I don’t. The iphone was $600 with subsidy. Other phones were free or less than $100 w subsidy.

IMHO it's easier to bring a high end retail down to the common folks than to take a low end retail to the rich folks.

That's how luxury goods..Couch, Michael Kors work...become a luxury good, then reduce price/quality for common folks. Common folks get luxury name and feel good.

You'll abandon the rich people but you'll make more money.

I poked my head in to see what the fuss was about when Amazon purchased them. $8 for a dozen eggs when other stores charge $3. Pure insanity. I laughed myself out of the store.

Make it a real argument, not a straw-man. WF has their most expensive pasture-raised eggs at under $8/dozen while also selling cheaper varieties at closer to $3/dozen or $4/dozen, and even their cheaper varieties are not from the truly grotesque worst-case factory farms that the cheapest eggs elsewhere come from. There might be something to debate here, but it's definitely not insane.

There do exist upscale over-priced places way more expensive than WF which are closer to your straw-man.

I can only speak to items I'm familiar with. Cafe Du monde for example sells for $9.99 at Whole Foods. It's $4.99 at your local Asian grocery store, $3.99 on sale.

$7.44 at Walmart

Pics for proof: http://www.imgur.com/gallery/BrHhzVx

I guess the high price is the Whole Foods tax. That being said, I do eat at their deli...

The problem is Amazon bought whole foods at the peak. The other retailers were already catching on that people will pay higher margins for some things and developing to serve that market. This brings out price competition, eroding margins...

Hard to call a peak while it's happening, don't you think? I think one thing WF has that is not as obvious is a nice atmosphere and interior design. It's just relaxing to walk through it compared to a Safeway or Fred Meyer or whatever. I don't see WF falling behind any time soon.

I will fully agree with your points. To me it looks like the peak, but we will only know in 20 years.

Note that business is complex and a good business pivots often, it may be that whole foods was bought at the peak of one, but they pivots to something else and remain successful. If Whole foods pivots to something else and remains successful that would prove nothing either way.

Fred Meyer, Smiths, King Soopers, City Market -- all great stores. The other neat thing about them is that even backwoods towns now have self checkout (not every single location yet but close). I would have to say they are just about the best grocery store conglomerate out there.

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