Are Whole Foods’ price cuts game-changing for food retailing?
On its first day of ownership on Monday, Amazon — as promised — lowered prices across a selection of staples at Whole Foods.
According to Bloomberg, categories at Whole Foods’ 57th Street location in Manhattan seeing cuts of between 33 and 48 percent included organic Fuji apples, to $1.99 a pound from $3.49; Whole Trade bananas, from 49 cents a pound from 79 cents; and animal-welfare rated, 85-percent lean ground beef, $4.99 a pound from $6.99. Items dropping between 13 and 15 percent included organic baby kale (per package), $3.49 from 3.99; and 365 Everyday Value Organic Butter (per pound/four sticks), $4.49 from $5.29. A dozen large brown organic eggs were reduced 7 percent to $3.99 from $4.29.
The items surveyed by Bloomberg had been expected to be lowered per a press release issued by Amazon on Friday after regulators approved the $13.7 billion takeover. The release indicated Whole Foods would also be offering in-store specials to Prime members, that Whole Food’s private labels would sell across Amazon’s platforms, and lockers would land in select Whole Foods locations to enable the pick-up/return of Amazon.com purchases.
Store visits by RetailWire showed the price reductions extended to some dairy items, cases of bottled water, frozen whole chickens and various pasta sauces, but not much beyond the 14 items mentioned in the release.
Indeed, the changes were barely perceptible inside stores. A small display of Amazon Echos sat alongside the produce department. Posters on front windows showing freshly-picked produce read, “We’re growing something good. This is just the beginning. Whole Foods Market + Amazon.”
The few staples receiving the price reductions came with hangtags promising “More to come…” Many in the industry expect other grocers will have to match a steady stream of cuts in other categories bound to arrive.
Moody’s lead retail analyst Charlie O’Shea said in an e-mail Monday, “As we have seen multiple times, and in multiple product segments, Amazon has the advantage of not facing the same scrutiny surrounding its profitability from its shareholders as other competitors, and we believe the company will continue to exploit this in the grocery segment.”
- Amazon and Whole Foods Market Announce Acquisition to Close This Monday, Will Work Together to Make High-Quality, Natural and Organic Food Affordable for Everyone – Amazon
- Amazon Cuts Whole Foods Prices as Much as 43% on First Day – Bloomberg
- At Amazon’s Whole Foods, lower food prices and a tower of discounted Amazon Echoes – Washington Post
- Whole Foods’ Amazon-powered price cuts are live, have already expanded to include several grocery staples – TechCrunch
- Whole Foods Stores Start Week With Lower Prices, Echo Speakers Next To Vegetables – Consumerist
DISCUSSION QUESTIONS: What actions do you expect Amazon to take in recasting Whole Foods’ pricing stance? What other features of Amazon’s approach to Whole Foods revealed so far will be challenging for other food retailers to match?