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Amazon (AMZN) has recently announced that it will be stepping into the grocery business by opening dozens of Amazon Grocery Stores in major cities of the United States of America. Amazon (AMZN) has revealed that the reason they are launching these stores is to provide people with food related products in the cheapest rates than any other competing grocery platform. This initiative taken by Amazon (AMZN) has grown concerns among all of the major grocery supermarkets such as Costco Wholesale Corporation (COST), Dollar General Corporation (DG), Dow Component Walmart Inc. (WMT) and Target Corporation (TGT).
However, Kroger Co. (KR) is the one taking most of the impact from Amazon’s (AMZN) initiative as they have sold off more than 4% of their shares, right after Amazon broke the news. In the recent development, Kroger’s stock fell to the lowest value in the last two-months and just made a comeback this weekend.
With the earnings review for the fourth quarter ahead, Kroger Inc. (KR) is expected to report their profits of 52-cents and $28.4 billion in revenue. On top of this, Kroger Inc. (KR) is also facing a 3% year-over-year demise in their revenue. Furthermore, Kroger Inc. (KR) has also faced a 6-month low in their stock prices in the stock market.
As of now, Amazon has announced that it will be launching its Amazon Grocery Stores in San Francisco, Chicago, Seattle, Los Angeles, Philadelphia and Washington DC. Although, the initiative has already caused a ripple among the top grocery supermarkets, the consumers will be the ones deciding whether they find the prices of the Amazon grocery stores to be cheaper than the rest.
This may also come as a big responsibility for Amazon Inc. (AMZN) as all eyes are on them, not because they have claimed to provide customers with products at the lowest costs but facilitate the people who are hardly able to make ends meet and depend mainly on the food-stamp structure that the other grocery supermarkets are already offering their consumers.
Many economic experts have commented that Amazon Inc. (AMZN) has to be very careful with this new endeavor as it has already taken a blow to its reputation because of the recent tax break revelations and labor practices and if they do not play it out smartly, they will end up causing more damage to their reputation.
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