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Price cuts all round as Amazon signals ‘affordability’ vision for Whole Foods

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Shoppers will know straight away that things are going to be different at Whole Foods Market, when Amazon completes its $14 billion acquisition of the natural food retailer on Monday (18 August).

The internet giant says that “making natural and organic food affordable to everyone” is its vision for Whole Foods, and that “as a down payment on that vision” it will straight away introduce comprehensive price cuts across its 460 stores, with a promise of “more to come”.

In other developments that Amazon describes as “just the beginning”, the internet retailer will start to weave together its online business and physical stores by turning its paid-for Prime service into a Whole Foods rewards program, offering further savings to customers. Meanwhile, number of Whole Foods lines – including the 365 Everyday Value range – will become available through Amazon.com and AmazonFresh, while Amazon Lockers will start to appear in select Whole Foods locations.

“I absolutely think it’s putting the rest of the market on notice

“We’re determined to make healthy and organic food affordable for everyone. 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,” said Jeff Wilke, CEO of Amazon Worldwide Consumer. “There is significant work and opportunity ahead, and we’re thrilled to get started.”

“It’s been our mission for 39 years at Whole Foods Market to bring the highest quality food to our customers,” said John Mackey, Whole Foods Market co-founder and CEO. “By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market’s high-quality, natural and organic food.

Mackey added: “As part of our commitment to quality, we’ll continue to expand our efforts to support and promote local products and suppliers. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”

Reaction

• Retail industry analysts are unsurprised at the speed with which Amazon is implementing changes as Whole Foods.  “This is how Amazon operates, it’s all about speed, speed, speed,” said Michelle Grant, head of retailing at Euromonitor, a market research firm.

• Analysts also expect on-going price wars with other grocery retailers in the future. Talking to the New York Times, strategy consultant, Brittain Ladd, said: “I believe what we will see is Amazon and Whole Foods becoming aggressive on price. I won’t be surprised if some prices are lowered 15 percent to as high as 25 percent in some categories.”

• Bob Hetu, an analyst at Gartner, the technology research firm, told the newspaper: “I absolutely think it’s putting the rest of the market on notice.” 

• In a post at forbes.com, economist Jeffrey Dorfman says that while most people will focus on the lower prices part of the Amazon-Whole Foods announcement, a by far bigger impact on food retail more widely will come from “the plans for cross-platform selling … in both directions.”

“Amazon founder and CEO, Jeff Bezos had “always been willing to lose money, disappoint shareholders and start discount wars to challenge and inflict pain on competitors”

• A New York Times commentary on latest developments at Amazon-Whole Foods asserted that Amazon founder and CEO, Jeff Bezos had “always been willing to lose money, disappoint shareholders and start discount wars to challenge and inflict pain on competitors. In the 23 years that Amazon has been in business, he has done it again and again – with books, diapers and now groceries – fundamentally changing whole retail categories.”

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