Amazon may to cut Whole Foods prices

Reuters

Reuters

Last week, with the completion of the purchase on the horizon, Amazon announced that customers would immediately see lower prices on some items at Whole Foods stores.

The question remains how Amazon is capable of offering lower prices starting with day one of Whole Foods ownership.

When Amazon.com (AMZN) announced that it would purchase Whole Foods Market in July, Barron's dubbed it the "grocery apocalypse" for the impact it could potentially have on companies like Kroger (KR), Costco Wholesale (COST) and Wal-Mart Stores (WMT).

Price cuts varied slightly from city to city.

"Price was the largest barrier to Whole Foods' customers", said Mark Baum, a senior vice president at the Food Marketing Institute, an industry group. "I do think the combination of Whole Foods and Amazon could be very disruptive to traditional grocers".

It's an "opening salvo" in the grocery wars, said Neil Saunders, managing director of GlobalData Retail, and shares of other supermarkets fell on the news. Making Whole Foods' groceries searchable on Amazon's website doesn't increase the internet's cache of product information - consumers can already get that on the grocer's website - but it will steer consumers squarely toward Whole Foods' products. It can nix underperforming products in Whole Foods and use the extra storage behind the scenes to stock its own in-demand items.

Those moves, along with its aggressive curbside pickups for grocery orders, has helped the giant retailer post its best growth for food sales in the last five years for its most recently ended quarter.

Whole Foods label products, such as 365 Everyday Value, will be available through Amazon.com, Prime Pantry, Prime Now and AmazonFresh. "I mean, I don't know", she said.

First spotted by Business Insider, a Brooklyn Whole Foods is selling the Amazon Echo, calling it a "pick of the season", discounting the price of the popular smart speaker. "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". The 33-year-old teacher shops at Whole Foods about once a week for baby food but tends to buy the rest of her groceries at Trader Joe's. Organic rotisserie chickens went from $13.99 to $9.99 each, while ground beef was trimmed from $6.99 to $4.99 a pound.

The online retailer isn't wasting any time remaking the high-end grocery chain in its low-price image.

Amazon said those changes were just the beginning, but didn't give details on what more is coming. This allows it to make margin on long-tail items if it so chooses.

Whole Foods has two stores in Pasadena, one in West Pasadena at 465 South Arroyo Parkway, and another in East Pasadena, at the Hastings Ranch Shopping Center at 3751 E. Foothill Blvd.

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