One of Wal-Mart Stores Inc WMT's most notable advantages over rival Amazon.com, Inc. AMZN is its ability to attract customers into its stores with fresh food and other food products. In fact, grocery happens to be Walmart's single biggest revenue driver, but for the first time ever, it is now "under siege" by Amazon, according to David Seaburg, head of equity sales trading at Cowen and Co.
Amazon's acquisition of Whole Foods Market, Inc. WFM is officially complete as of Monday morning. But Amazon wasted no time at all announcing last week it will begin an immediate program to cut prices on a range of items in its newly acquired grocery store chain.
Amazon is going to "attack and go after the customer and take them from Walmart," Seaburg explained during a recent CNBC "Trading Nation" segment. Amazon has a chance at beating Walmart at its own game because it can not only compete on price but do so on "higher-quality" products.
"Walmart's going to suffer," he said.
But Walmart's woes don't end with just Amazon, Seaburg continued. The European-discount supermarket chain Aldi continues to push itself into the American grocery market and similar to Walmart, it offers high-quality products at low prices.
"I think Walmart is going to be under siege from them as well," he also said.
Walmart coming "under siege" from more than one grocery chain makes Walmart's stock, once considered a "relative safety trade," now expensive with minimal upside.
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