Ever since Amazon’s recent $13.7 billion acquisition of organic grocery chain Whole Foods, people have been wondering what kind of changes would come about in the stores. One very noticeable change has already happened, and that is a price cutting campaign on certain Whole Foods items such as large brown eggs, salmon, bananas, almonds and only a few others.
It will take a while for prices to drop on all items, but it’s apparent that Amazon wants to shed the “Whole Paycheck” reputation and try to compete with other grocery retailers.
Integration has already begun between Whole Foods and it’s now-parent company. Amazon prime members are offered even further discounts at Whole Foods locations, and shoppers can now find the Echo and Echo Dot devices on display shelves of their local Whole Foods as well.
Now as far as the price-cutting goes, I’m always elated when something like this happens. A company purposely lowering their prices is by far one of the most beneficial things that can happen to consumers, and the company that is doing the price-cutting will reap major benefit in the form of more customers and thus more profit. The only way this gets any better is if a competitor returns fire by lowering their prices also, which is known as a good old-fashioned price war.
It will be interesting to see how other grocery companies behave with regards to their pricing, but as far as share prices go, the market was not very kind to three notable grocery stocks: Kroger, Sprouts, and SuperValu Inc.
The price-cutting shouldn’t come as a shock, as low prices(along with convenience, extraordinary selection, and quick delivery) are one of the key drivers of Amazon’s phenomenal growth over the years. Expect more of this type of behavior along with further integration of the two brands.
Sources:
http://www.chicagotribune.com/business/ct-amazon-whole-foods-prices-20170828-story.html
http://www.10tv.com/article/now-whole-foods-cheaper-milk-farm-fresh-amazon-echo