Shoppers are seeing lower prices on numerous everyday produce items and other products at Whole Foods stores, and analysts predict there are more competitive moves to come in the wake of Amazon finalizing its acquisition of the organic-focused retailer.

Whole Foods rolled out markdowns Aug. 28, the day the deal closed, and said in a news release that the wave of cuts is “just the beginning.”

Analysts expect that changes in the coming months and years will be aimed at making Whole Foods price-savvy in other ways.

Paul Weitzel, vice president for Inmar Willard Bishop Analytics, said he expected the company to promote items using more than displays.

“I think you will see a lot more digital offers,” Weitzel said. “There’s technologies now that as you enter the store, as you go into an aisle, it can identify where you’re at and it can offer promotions, or you can use your phone to find products in the store.

 Photo by Ashley Nickle

“It’s moving that direction to where it’s going to know where people are at, it’s going to present offers at the right time based on how you shopped before, what you bought, do you use coupons or don’t you, do you buy multiple products if it’s a two for $5, three for $10 type of thing,” Weitzel said. “It’s going to know your behaviors.”

Kantar Retail analyst Elley Symmes said Amazon will soon incorporate Whole Foods into its annual digital doorbuster sale Prime Day.

“Imagine if on Prime Day you got 40% all Whole Foods purchases, something like that,” Symmes said. “I think that’s going to start to be a really competitive food space holiday, and grocery retailers are going to have to start responding and incorporating that into their promotional cycles, into their strategic meetings with their manufacturer partners, that’s going to become a conversation.”

More generally, however, other retailers might not be too worried about the in-store price drops given the higher starting points.

 Photo by Ashley Nickle

In addition to lowering prices, Amazon announced several other changes, including that Whole Foods private-label products will soon be available to order through Amazon and that Amazon Prime will be the rewards program for Whole Foods.

“I think most retailers are going to respond slowly and cautiously,” said Bill Bishop, chief architect for retail consulting firm Brick Meets Click. “The main reason would be that prices would be the first place they’d all look to respond ... If they’re being dropped from high to competitive levels, then people may still be comfortable with their prices vis-à-vis Whole Foods.”

At a Whole Foods store in Overland Park, Kan., (Kansas City metro area) a banner above the front doors proclaimed the new partnership: “We’re Growing Something Good.”

Produce items at that location with lower prices included:

  • organic fuji apples down 33%, from $2.99 per pound to $1.99
  • organic bananas down 22.5%, from $0.89 per pound to $0.69
  • conventional bananas down 29%, from $0.69 per pound to $0.49
  • organic baby spinach down 12.5%, from $3.99 to $3.49
  • organic spring mix down 12.5%, from $3.99 to $3.49

For most, it came as no surprise that Amazon cut Whole Foods prices as soon as the the acquisition went final.

 Photo by Ashley Nickle

“We knew it was going to happen fast, but of course this is happening way faster than anyone was expecting,” Symmes said. “Amazon’s just being so aggressive with this deal, in a very strategic way.”

The objective is to broaden the retailer’s reach, particularly by chipping away at Whole Foods’ reputation for being expensive, Weitzel said.

“It’s definitely not mainstream, and Amazon is more mainstream,” Weitzel said. “(Lowering prices) was an easy fix for them.

“It didn’t require any change of operations,” Weitzel said. “They went after the commodities that are sort of the known value items ... I think it’s their first move to take Whole Foods and make it kind of more appealing to mainstream America.”

 

 
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