After acquiring ownership of the popular Whole Foods brand and all of their brick-and-mortar stores, Amazon spent their entire first day slashing prices at the chain by nearly 43%. This included placing the popular Amazon Echo, an electronic assistant that can be activated by the sound of your voice, on sale for $99.99, and now making the device available to be purchased at Whole Foods stores everywhere. A smaller version of the product, known as the Echo Dot, was also being advertised for a price point of $44.99.
Amazon’s purchase of Whole Foods, which was reported to be at approximately $13.7 billion, is said to have created a massive wave throughout the entire supermarket industry, which itself is valued at $800 billion. The merger is believed to be a sense of change in the way that customers shop for all of their groceries, and slashing prices at Whole Foods is a way for Amazon to show that they are extremely serious at taking on other such competitors like Kroger, Costco, and Walmart.
A senior vice president who is associated with the Food Marketing Institute, Mark Baum, went on record of stating that perhaps the biggest barrier for Whole Foods customers was price, and that Amazon has truly demonstrated that they are more than willing to invest in order to win in all of the categories that they choose to compete in. Baum also stated that all food retailers should take the time to look at all of their different pricing strategies, as well as seek out various sources of funding in order to build up a proverbial war chest to help them along.
Just to provide some examples of some of the price cutting that Amazon has done at Whole Foods, here are some changes that were found at the chain’s location on East 57th Street in Manhattan:
*Organic Fuji apples that had initially cost $3.49 per pound were marked down to $1.99 per pound.
*Organic avocados that were priced at $2.79 each were now $1.99 each.
*Organic rotisserie chickens, originally $13.99 each, were now priced at $9.99 each.
*Many bananas were now 79 cents each rather than costing 99 cents each.
Many of the same types of discounts could be found at other Whole Foods locations in both Seattle and San Francisco, though they were comparable.
Rivals of Whole Foods are said to be reacting to what they are referring to as a new era of selling food across the entire country. For instance, Walmart, which is known as the biggest retailer in the world, already had invested billions of dollars in terms of lowering prices at many of their stores over the past year, as well as taking the time to revamp their entire produce section and rolling out their brand’s curbside grocery order pickup program. All of this greatly helped Walmart to record their best overall sales growth within five years over their most recent quarter.
In terms of Costco, their brand contains a wide variety of organic items, all of which are priced approximately 30% cheaper than those sold at Whole Foods. This is thanks in large part to the fact that Costco charges a membership fee, as well as selling items in bulk and essentially focusing more on an in-store experience that mirrors a treasure hunt of sorts.
Kroger, on the other hand, fell approximately 37% this past year due to factors including concerns from investors over the union of Amazon and Whole Foods and disappointing sales. A spokesperson for the brand, however, maintained that they have the human connection and expertise they need to win with all of their customers and are leveraging in all of those in order to build loyalty and provide value, which would enable them to serve customer anything, anytime, anywhere.
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