Following its acquisition by Amazon, Whole Foods Market has slashed the prices of some popular food items such as apples and avocados in a bid to shed its high-prices reputation which has seen it earn the moniker ‘whole paycheck’. One other change that was visible to shoppers who visited the Whole Foods outlets included Amazon Echo devices being displayed for sale amidst the fresh produce.
The cut in prices had been expected since last week and the two retailers are promising that more discounts are on the way. Prior to Amazon’s acquisition of Whole Foods, other grocery sellers and supermarket chains such as Walmart and Costco were also grappling with pricing pressures as competition intensified. With the acquisition shares of food sellers have fallen over fears that Amazon will greatly disrupt the business in a similar way to what happened to electronics and book stores when the online retail giant entered these businesses.
In reaction to the expected heightened competition some rivals have already begun preparing for the new era. Walmart has in the last one year for instance been investing billions with a view to slashing prices. The retail giant has also undertaken a revamp of the produce section in its U.S. outlets by adding more fresh fruit and improving sight lines.
Walmart has also aggressively launched a curbside grocery pickup service. This has paid off and in its most recent quarter, the retail giant record the highest growth in food sales in five years.
Prior to the acquisition by Amazon Whole Foods Market was struggling due to its high prices as well competition from other retail chains.
“[Their prices] were off-putting to a lot of potential customers and for good reason; a substantial part of the population felt it couldn’t afford to shop at Whole Foods,” said Bankrate.com’s senior economic analyst Mark Hamrick.
It expected that other than just lowering prices at Whole Foods, Amazon could seek to put the grocer on a growth trajectory by availing Prime memberships to customers of the chain. The annual fee for Prime membership is $99 and members are able to not only get free shipping when they purchase online from Amazon but also get other benefits such as free video streaming. Amazon does not reveal the number of Prime members but it is estimated to be more than 65 million. Costco’s membership program is credited with helping the retailer keep its prices for groceries low.