Published: Sat, August 26, 2017
Finance | By Kristine Clayton

Amazon-Whole Foods announcement won't have an immediate impact on rival grocers

Amazon-Whole Foods announcement won't have an immediate impact on rival grocers

Amazon, which is buying the supermarket chain for almost $14 billion, just announced that it'll slash prices at the grocery stores starting Monday, when the acquisition goes through.

Lower prices on a selection of best-selling staples across its stores, including Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, and much more.

Whole Foods Market's healthy and high-quality private label products-including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch-will be available through, AmazonFresh, Prime Pantry and Prime Now.

Beyond that, some Whole Foods stores will get Amazon Lockers, where customers can receive online orders and make returns.

Just two months ago, Amazon announced it would be purchasing Whole Foods Market.

The deal, first announced in June and approved by Whole Foods shareholders Wednesday, will give Amazon a massive physical retail footprint.

John Mackey, the Whole Foods co-founder and CEO, will stay on as CEO after the acquisition.

As with most new Amazon initiatives, the company is folding its $99-per-year membership program into the Whole Foods mix.

Whole Foods will continue to expand in terms of staff and locations and will maintain operations under the Whole Foods Market brand. Who needs that when you have millennial-friendly Amazon? Given that 70.3% of Whole Foods core customers are already members of Amazon Prime, the linkage covers a significant part of the existing shopper base.

Will Amazon's acquisition of Whole Foods and slashing of prices make you want to shop there more often?

"The speed with which Amazon intends to adjust pricing across the Whole Foods network will force changes in the way the industry operates", Portell told FierceRetail.

The grocery business has been under increasing pressure for quite awhile and there has been something of a mini-price war for such staples as eggs and milk. Amazon has more than 60 million Prime members, according to analyst estimates.

"We feel great about our position with our network of stores around the country and fast growing e-commerce and online grocery businesses, " said Randy Hargrove, a spokesman for Walmart.

While Whole Foods does boast superior profit margins compared to many of its competitors, allowing Amazon to make some immediate price cuts, the two companies will need to innovate together in order to support ongoing price decreases. In the future, after "certain technical integration work is complete", Amazon Prime will become Whole Foods' customer rewards program.

Stew Leonard chief executive of Stew Leonard's, a chain of six grocery stores in NY and CT that focus on fresh produce. "Costcos were opening, then Walmarts, then Whole Foods".

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