Avocado price drops by 29%, bananas cut by 38%, salmon fillets 33%, beef 29%, among other items. Amazon decided the first day of its Whole Foods management will be marked by significant price cuts. The new owner of the famous grocery chain is cutting prices in an attempt to draw attention and attract new customers, as well as a part of a new business strategy.
Even the Amazon Echo, a voice-activated electronic assistant, was for sale, for $99.99 — a sharp pivot into electronics for a company known for kale and quinoa. The Echo Dot, a smaller version, was advertised for $44.99.
Amazon purchased Whole Foods for $13,7 billion which has greatly influenced the already changing $800 billion supermarket ecosystem. The merger holds great promise – it’s expected to upend the way customers shop for groceries. Cutting prices means they’re after the competition and it’s going to be a bloody fight against giants like Wal-Mart and Costco.
“Price was the largest barrier to Whole Foods’ customers,” said Mark Baum, a senior vice president at the Food Marketing Institute, an industry group. “Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest.”
Discounts were comparable at other Whole Foods stores in San Francisco and Seattle. Amazon declined to comment.
In the Pacific Heights neighborhood of San Francisco, Catherine Oshiro, a 33-year-old product designer, said lower prices may make her change her shopping routine.
“I usually buy my staples like toilet paper and paper towels at Target and Safeway,” Oshiro said. “If I see the lower prices at Whole Foods, I would start buying those basics here.”
Katie Bennett, 24, was one of many customers who said she hoped Amazon would offer delivery of Whole Foods items. She picked out a rotisserie-cooked half chicken for lunch at the New York store.
“Last time I came in, I was thinking about getting the rotisserie chicken, but it was too expensive,” she said.
Some rivals have already reacted to the kickoff of what could become a new era of selling food in the U.S.
Wal-Mart has already invested billions into lowering prices across the board over the past year or so, and has revamped the produce section at its U.S stores, improving sight lines, adding more fresh-cut fruits and other exotic items. Combined with an aggressive rollout of curbside grocery order pickup, the world’s biggest retailer its best food sales growth in five years in its most recent quarter.