When Amazon’s $13.7 billion acquisition of Whole Foods becomes final on August 28, 2017, shoppers will immediately see deep discounts on a plethora of items, including salmon, avocados, baby kale, and almond butter – all products that are normally rather pricey, regardless of where you shop. [1]
The following week, look for dropping prices on bananas, eggs, ground beef, rotisserie chicken, butter, and apples.
In a joint statement released August 25, 2017, Amazon and Whole Foods said:
“The two companies will together pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone. Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come.”
One strategy consultant who previously worked for Amazon in its grocery business expects Whole Foods prices to drop 15-25% in some categories. [2]
Amazon said customers will continue to see prices slide at Whole Foods stores, and Amazon Prime members will eventually see some special discounts not available to other buyers. Analysts say about 70% of Whole Foods shoppers are also Amazon Prime members. [1]
Amazon Prime offers customers faster shipping, video streaming, and other benefits for $99 a year. [2]
Jeff Wilke, chief executive of Amazon Worldwide Consumer, said in a statement:
“Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards. There is significant work and opportunity ahead, and we’re thrilled to get started.” [1]
Whole Foods has a reputation for being, eh, pretty expensive. The chain earned itself the nickname “Whole Paycheck” because of its high prices.
There are also a few examples of some rather ridiculous products with ridiculous price tags. A good example is its asparagus water – a bunch of asparagus stalks in a bottle of water that went for $6. The grocery chain eventually pulled the product after receiving a good bit of backlash from customers.
According to Morgan Stanley, Whole Foods’ prices are about 15% higher than at the average grocery store. By immediately cutting prices, analysts say, Amazon is making it clear that major changes are on the horizon, and it doesn’t mind temporarily cutting into profit margins.
Michelle Grant, head of retailing at Euromonitor International, a London-based market research firm, said:
“Amazon is playing to its strengths here. Obviously the low-cost approach is in Amazon’s DNA, and it’s something Whole Foods has been struggling with for a quite some time.”
Jeff Wilke, the executive who runs Amazon’s consumer business, said:
“We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality.” [2]
Sources:
[1] The Washington Post
[2] The New York Times