Amazon is cutting prices on more than 500 items at Whole Foods stores, in what the e-Commerce giant describes as its “biggest investment” in lowering prices to date. Whole Foods customers will save an average of 20% on the new reduced-priced items, according to a company statement.
In addition to the price cuts, Whole Foods is adding more perks for Prime members. They now qualify for two-hour delivery at Whole Foods, can use Alexa to add groceries to their Prime Now cart and can arrange for grocery pickup within 30 minutes at some locations. Prime members already received an additional 10% discount on hundreds of sale items and weekly discounts,and 5% cash back when they used Amazon’s Visa rewards card in stores.
“This is widely being planned as an attempt to reshape Whole Foods’ high-cost image,” said Jon Reily, VP, Global Commerce Strategy Lead at Publicis Sapient in commentary provided to Retail TouchPoints. “However, I see it as a shot across the bow of Aldi and Walmart to say ‘we are safe in our own space, now we are coming after your customers with lower prices and member only deals;’ two things neither the German or Bentonville grocery giants can compete with if Amazon puts its mind to it. They simply don’t have the margins or capital.”
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With the price cuts and added Prime perks, Amazon “recognizes the cutthroat competitive landscape in food retailing, led by Walmart’s relentless push to continue expanding its leading market position in the segment,” said Charlie O’Shea, VP and Lead Retail Analyst at Moody’s. “While Walmart has the wherewithal and willingness to meet the Amazon threat in food, as well as a different customer demographic, other food retailers will continue to feel the pressure from the ongoing and now-escalating battle between Amazon and Walmart, with this battle continuing to impact almost all retail categories.”
The Whole Foods price cuts will be concentrated on produce items such as greens, tomatoes and tropical fruits. Through the end of April, Whole Foods customers can get $10 off their $20 purchase in-store at Whole Foods Market when they try Prime online.
The specialty grocer’s last major price cut for all customers was in November 2017, specifically on holiday staples such as sweet potatoes, canned pumpkin and turkey.The company first slashed prices on nearly 500 grocery items in August 2017, shortly after its $13.7 billion purchase closed. But Whole Foods actually raised prices on approximately 550 products in February 2019 amid supplier pressures.
While the Amazon-Whole Foods acquisition definitely shook the grocery landscape when the news dropped, the partnership hasn’t rapidly driven Prime members into Whole Foods stores. Only 11% of Prime members said they shop at Whole Foods several times per month, according to Wolfe Research. By comparison, 65% of Prime members shop on Amazon’s web site at least that often.
