When Amazon.com took over Whole Foods last week, it announced that it would start immediately lowering prices at the fancy grocery chain known for its expensive organic fruits and vegetables and asparagus water, and on Monday, the company made good on that promise by slashing prices by as much as 43 percent.
Bloomberg reports that in addition to lowering prices on groceries at the chain, Amazon also offered its voice-activated personal assistant, the Amazon Echo, at the retail stores for $99.99, a lower-than-normal price for the device. A smaller version known as the Echo Dot was also on sale at the retailer for $44.99.
Bloomberg reports that in New York City, at the East 57th Street store in Manhattan, “organic fuji apples were marked down to $1.99 a pound from $3.49 a pound; organic avocados went to $1.99 each from $2.79; organic rotisserie chicken fell to $9.99 each from $13.99, and the price of some bananas was slashed to 49 cents per pound from 79 cents.” Orange signs next to the marked-down items read, “Whole Foods + Amazon,” listed the old price and the new price, and indicated that there was “More to come.”
Amazon purchased Whole Foods for $13.7 billion and is now poised to compete with other grocery giants such as Wal-Mart Stores Inc., Kroger Co. and Costco Wholesale Corp.
Mark Baum is a senior vice president at the Food Marketing Institute. He told Bloomberg: “Price was the largest barrier to Whole Foods’ customers. Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest.”
Amazon will eventually include Whole Foods brands such as 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch for shoppers on Amazon.com, AmazonFresh, Prime Pantry and Prime Now.
Sprouts Farmers Market is an upscale grocery chain that competes with Whole Foods and is offered on Prime Now in some markets. According to Bloomberg, analysts believe it is a possible consolidation target.
Karen Short is an analyst with Barclays Capital Inc. in New York, and Bloomberg reports that she said the following in a note: “Goodbye, Whole Foods as we know it. The conventional supermarket has not evolved much in decades. But Amazon will likely drive drastically different shopping behavior in grocery. The survival of the fittest has begun.”
Read more at Bloomberg.