A day after the Federal Trade Commission officially approved the $13.7 billion Amazon–Whole Foods Market acquisition, the companies announced that the grocer will offer lower prices on select items starting Aug. 28, including bananas, avocados, brown eggs, kale, salmon and tilapia, lean ground beef, rotisserie chicken, apples and butter.
“The speed with which Amazon intends to adjust pricing across the Whole Foods network will force changes in the way the industry operates,” said Greg Portell, lead partner in the retail practice of A.T. Kearney in commentary provided to Retail TouchPoints. “The complexity associated with traditional grocers makes it difficult to adjust pricing quickly. If Amazon is able to translate their dynamic pricing capability to the physical stores, traditional grocers will be under pressure to match that ability – regardless of whether they match prices.”
Prime Integration Creates Value Beyond Price Cuts
It is unclear how heavy the price cuts will be, but it’s not just about pricing for Whole Foods — and that has consumers excited and competitors intimidated. Here are some additional “perks” announced last week:
Amazon and Whole Foods Market technology teams will begin to integrate Amazon Prime into the Whole Foods POS system;
Private label brands such as 365 Everyday Value, Whole Paws and Whole Catch will be available to Amazon Prime members online;
Amazon Lockers will be included in 460 Whole Foods stores, making way for more BOPIS or BORIS opportunities; and
Prime members will receive special savings and in-store benefits when the integration is complete.
By convincing more Prime members to go to the store, Whole Foods is looking to wipe away the “Whole Paycheck” label that the grocer has suffered from in recent years, and to be more inviting to shoppers beyond the upper middle class-to-upper class clientele the grocer already attracts.