Value wars between Amazon and Walmart to attract cash-strapped consumers are heating up late in the year. Amazon announced on Wednesday morning the launch of a new private-label line called “Amazon Grocery,” which spans more than 1,000 products and is largely priced under $5. The timing couldn’t be better, as our attention has shifted to a storm brewing in the low-income consumer world.
Amazon Grocery will be a direct competitor to Walmart, Aldi, and other value grocery chains, offering affordable private-label goods amid ongoing value wars (read report). The new line will feature dairy, fresh produce, meat, snacks, and pantry staples priced under $5, an easy hook for low-income consumers. Another selling point: more than 1,000 items can be delivered straight to consumers’ doors, saving them the time and hassle of driving to the supermarket and pushing a cart down the aisles.
“The extensive selection includes everything from milk and olive oil to fresh produce, meat and seafood, with most products priced under $5, offering exceptional value to customers,” Amazon wrote in a press release.
“With Amazon Grocery, we’re simplifying how customers discover and shop our extensive private label food selection while maintaining the quality and value our customers expect and deserve,” Jason Buechel, Vice President of Amazon Worldwide Grocery Stores and Chief Executive Officer at Whole Foods Market, wrote in a press release.
Buechel noted, “During a time when consumers are particularly price-conscious, Amazon Grocery delivers more than 1,000 quality grocery items across all categories that don’t compromise on quality or taste – from fresh food items to crave-worthy snacks and pantry essentials – all at low, competitive prices that help customers stretch their grocery budgets further.”
Amazon has long operated a large online grocery business, selling household basics, paper products, and cleaning supplies. In recent years, it has doubled down on physical retail through Whole Foods Market, Amazon Fresh supermarkets, and convenience stores.
The timing of Amazon Grocery comes at a critical moment, following the sudden collapse of subprime auto lender Tricolor Holdings and CarMax’s earnings miss, which has shifted our focus onto the financial health of low-income consumers as cracks begin to appear.
This week, Goldman’s consumer sector specialist, Scott Feiler, and financials sector specialist, Christian DeGrasse, both noted that low-income trades are under pressure, pointing to Tricolor and CarMax as potential drivers that have set off alarm bells among investors.