Lina Khan was right. While the former Federal Trade Commission (FTC) chairperson couldn’t have been more wrong when she attempted to block the proposed merger of Kroger and Albertsons (by using flawed competitive market share data), her suit against Amazon over “Godzilla’s” questionable tactics for signing customers for “Prime” memberships and then making it even more difficult to cancel them will cost the Seattle-based juggernaut up to $2.5 billion.
That’s $1 billion in civil penalties and between $1 billion and $1.5 billion in payouts to its customers, who could receive $51 each if they qualify. The settlement with the government is one of the largest in U.S. business history.
The settlement was announced three days after a jury trial had begun. Under the terms of the settlement, the misleading language that Amazon used to attract “Prime” customers will be prohibited.
Of course, “Godzilla” didn’t admit any legal wrongdoing, but in agreeing to a fine that large, even for an enterprise with the scale of Amazon, the settlement emits more than a hint of guilt. Since the lawsuit was filed in 2023, Amazon has made it clearer and easier to enroll in “Prime” and to cancel the service if desired.
The power of the company and particularly its “Prime” members is daunting. Currently, there are more than 200 million members who pay $139 million annually for the service (that’s nearly $28 billion in annual up-front revenue from “Prime” alone; Amazon’s overall subscription income was more than $44 billion in 2024). And during its recently completed second quarter, total subscription revenue reached $12 billion.
The “Prime” settlement was just “Act 1.” Up next on the legal docket between Amazon and the FTC is another suit that Khan filed in 2023 in which she accused “Godzilla” of “exploiting its monopoly power” by squeezing its third-party sellers who allegedly offered lower prices on other websites. Amazon has denied that claim. A trial on that matter is likely to occur in 2026 and could be even more costly than the “Prime” outcome.
It’s the age-old question: are you simply powerful or have you crossed the line and become a bully?
‘Round The Trade
The jury is still out on the reboot of Amazon Fresh (AF) stores, of which there are now 64 nationally and 23 in the Mid-Atlantic region. There are also 19 AF units in the UK, but not for long. “Godzilla” said it will close 14 of its AF stores in the UK and covert five others to its sister Whole Foods brand. With these five conversions and another new London store slated to open next year there will be 12 WFM units in the UK in the next 18 months.
Also from Amazon, slightly disappointing results from its July “Prime Day” sales apparently won’t deter the company from hosting another “Prime” event; this year’s “Big Deal Days” will occur on October 7-8. Rivals Walmart and Target are also running slightly longer promotional events during the same period.
If you’ve got a strong brand, why not maximize the marketing potential of that label? That’s what Amazon and Aldi are doing. Both mega-retailers are already strong private label players, but both merchants are upping their games by offering new name-centric items. For Amazon, it is launching its own “Amazon Grocery” brand which it said will “unite” existing own-brands Happy Belly and Amazon Fresh into one line and include more than 1,000 food items. Amazon said private label sales increased 15 percent during the past year. At Aldi, where PL products comprise more than 90 percent of the inventory at its approximately 2,400 discount stores, all items will eventually see the “Aldi” name be used as the company’s primary own-label. Some popular brands such as Clancy’s (snack foods) and Simply Nature (natural/organic) will retain their names and have the term “an Aldi original” added to the packaging.
Late last month, at an internal conference at its headquarters in Bentonville, AR, Walmart CEO Doug McMillon uttered the words that other chief executives have publicly shied away from: “AI is going to change literally every job in the world, adding “maybe there’s a job in the world that AI won’t change, but I haven’t thought of it. Also, unlike many other CEOs, McMillon admitted that some jobs will be lost due to the sheer power of artificial intelligence, but added it was important to create new roles in the company’s vast organization which currently employs 2.1 million associates (1.6 million in the US).
Just before presstime, we learned that Acosta, now the country’s largest sales agency (food brokerage), has been named to represent the Unilever account nationally. That account had been represented by Advantage Solutions for many years and is reportedly valued at about $70 million in annual commission revenue making it likely the most valuable line that any agency handles. Over the last few years, Acosta has pried away several other high-volume CPGs from Advantage Solutions including Smucker’s and Ocean Spray. In 2024, Acosta also acquired rival national agency Crossmark. As for Advantage Solutions, it’s been tough sledding recently for the Irvine, CA-based agency which went public in 2020 (via a SPAC deal) and whose shares were trading for about $1.45 each at presstime, a huge decline from five years ago when ADV shares were trading at more than $10 each.
Local Notes
Only UNFI could put a positive spin on its recently released Q4 results in which the Providence-based wholesaler/retailer lost $87 million and took a 5 percent sales hit due to a cyberattack in June and the ensuing prolonged recovery. However, CEO Sandy “Bulletproof” Douglas had a slightly different view, noting that “UNFI delivered a solid fourth quarter as we effectively navigated the cyber incident in collaboration with our customers and suppliers.” Obviously, Sandy’s talking to different customers than I am. And the hits just keep coming at UNFI. The finalization of C&S’s acquisition of SpartanNash adds another Midwest threat to one of UNFI’s biggest divisions. One more note: workers at UNFI’s Atlanta depot have ratified their first collective bargaining agreement (Teamsters Local 728) covering approximately 225 warehouse workers and drivers. In the past 14 months alone, more than 1,000 UNFI associates have joined Teamsters affiliates in Sarasota, FL and Urbana, IL
Giant Eagle, the Pittsburgh-based regional chain, said it will invest $100 million over the next 15 months to lower prices, improve service and revitalize its stores as it deals with rocky economic conditions and increased competitive threats from Walmart. Part of the Western PA and market leader’s focus will be on upgrading produce, stepping up associate training and enhancing its mobile app. The initiative, called “Because it Matters” follows key changes at the retailer including the recent sale of its c-store division, GetGo (for $1.6 billion) and the appointment of veteran Bill Artman in 2023, the first non-family leader in the 94-year history of the company.
New stores openings this month include the Daily Shop, Whole Foods’ small-format entry (10,000 square feet) which will debut in Crystal City (Arlington), VA on October 23. This will be WFM’s fifth Daily Shop overall, the other four are located in Manhattan with future plans to add more Daily Shops in Brooklyn and Hoboken, NJ. A day earlier, Lidl will open a new discount unit in Woodbridge VA (Prince William Parkway), its second store in Woodbridge.
After a startup problem last year, Ahold Delhaize USA is ready to begin the onboarding process for The Giant Company at its new frozen food distribution center in Mountville, PA (Lancaster County) that it operates with its partner Americold. Frozen distribution to service Giant/Landover’s stores was completed earlier this year. Still to come for the Americold/ADUSA partnership is the debut of another new frozen depot in Plainville, CT which will serve Stop & Shop’s New England and New York divisions.
Finally, a shout out to Hamberger Helper, which is experiencing its best year since the Stone Age. The beef enhancer, which was first launched by General Mills in 1971, was acquired by private-equity driven Eagle Foods in 2022. Sales this year have jumped 14.5 percent fueled by rising beef prices and an overall tightening of the economy, making value a priority for many consumers. In my younger days, Hamberger Helper used to be a “go-to” item in my pantry. With those fond memories I’m reminded of the comforting words of Uncle Eddie (Randy Quaid) in the first “Vacation” movie in 1983. When the crude but lovable Quaid invites his cousin Clark Griswold’s (Chevy Chase) family over for a cookout at his home in rural Kansas, he’s asked “what’s for dinner?” by Chase. Eddie, hovering over the grill, quickly responds: Mmm, Mmm, Mmm! I don’t know why they call this stuff Hamberger Helper. It does just fine all by itself.” Amen.
Jeff Metzger is publisher emeritus of Food World and Food Trade News and founder of Taking Stock LLC, a grocery industry advisory and consulting firm.
