Analyst: Whole Foods’ lower price claims are mostly ‘noise’
Amazon.com and Whole Foods Market have certainly gone to great lengths from a marketing and public relations standpoint to give the impression that the grocery chain has shed its “Whole Paycheck” label. The reality, however, is quite a bit different than the hype, according to new market basket research.
The study conducted seven times with market baskets containing the same 108 items found that current pricing at Whole Foods was just 0.8 percent lower than when the chain was acquired by Amazon last year, according to Gordon Haskett analyst Chuck Grom. Compared to the period right after Amazon bought Whole Foods and dropped prices to make a splash, the cost of the baskets actually increased 1.3 percent.
Amazon Prime members did a little better in Mr. Grom’s research, saving an additional $1.54 on the market basket of over $400. The study did not factor in those customers who pay for their purchases at Whole Foods with the Amazon Rewards Visa card. These customers earn five percent cash back on purchases at the chain’s stores.
Regardless of the market basket reality, it seems that at least some customers have bought into the “noise” around Whole Foods’ pricing. A Forbes article points to a survey of more than 500 shoppers at the organic foods chain in June, which found that 49 percent believe Whole Foods’ prices “have improved” under Amazon’s ownership, while 46 percent say they have not seen a change and five percent say prices have gotten “worse.”
Research by Sense360 found that adding Whole Foods as a perk for Prime membership has drawn more of these Amazon subscribers to the grocer’s stores. The firm, which tracks data from smartphones, found that Whole Foods has grabbed two percent share from Trader Joe’s in markets where the chains are within a mile of one another.
Research from Accompany found that 50 percent of Prime members plan to increase their visits to Whole Foods. Fifty-six percent indicated they were more likely to renew their subscriptions as a result of the Whole Foods perk.
- Under Amazon, Whole Foods’ Prices Have Actually Barely Budged, Study Finds – Forbes
- Don’t believe the hype about Amazon ‘savings’ at Whole Foods – New York Post
- Is Amazon a major threat to Trader Joe’s? – RetailWire
- Amazon gives Prime members another reason to shop at Whole Foods – RetailWire
DISCUSSION QUESTIONS: How effective has Whole Foods been in dispelling its image for high prices under Amazon’s ownership? Will the current benefits offered to Prime members be enough to sustain visits to Whole Foods?