Again, Amazon attempts to shed Whole Foods’ high price image
John Mackey may believe that Amazon’s acquisition of Whole Foods saved the organic grocery chain from being “trapped” in the “Whole Paycheck” image that has hung around the company’s figurative neck for years. Yesterday’s announcement that Whole Foods is again cutting prices, its third and biggest investment round to date, is an indication that the chain still has a way to go before its perceived advantages in quality, selection and service offset the price tags attached to the products it sells. This is particularly true in a market in which consumers have plenty of choices to buy the same or similar items at lower prices than those found at Whole Foods.
Beginning tomorrow, Whole Foods will lower prices on fresh produce items and offer more weekly deals to Amazon Prime members in departments across the store. Whole Foods claims it will lower prices by an average of 20 percent on selected items.
“Whole Foods Market continues to maintain the high-quality standards that we’ve championed for nearly 40 years and, with Amazon, we will lower more prices in the future, building on the positive momentum from previous price investments,” said Mr. Mackey, co-founder and CEO of the grocery chain, in a statement.
Whole Foods has also promised to double the number of exclusive weekly deals for Prime members in the months to come. The chain announced that discounts will be deeper and that it will offer more than 300 deals exclusively for Prime members.
“When Whole Foods Market joined the Amazon family, we set out to make healthy and organic food more accessible. Over the last year, we’ve been working together tirelessly to pass on savings to customers,” said Jeff Wilke, CEO of Amazon Worldwide Consumer. “Every time a customer walks into a Whole Foods Market, they expect and trust industry-leading quality standards across aisles. And now they will experience that same Whole Foods Market quality with even more savings across departments.”
Amazon is also looking to bring in new Prime members with its latest Whole Foods promotion. Customers who try Prime will get $10 off a $20 purchase at the grocery chain’s stores by going to amazon.com/WholeFoods10.
While Amazon continues to emphasize savings, evidence suggests that grocery prices continue to face inflationary pressures. A number of prominent CPG brands have announced price increases and many economists and companies are also concerned that trade actions such as closing the U.S. southern border could dramatically reduce supplies and raise prices on items such as avocados — a big seller at Whole Foods.
Whole Foods, according to a Wall Street Journal report in February, has raised prices on items anywhere from 10 cents to several dollars following manufacturer price hikes. The retailer has maintained that it intends to pass along some price increases while absorbing others.
- Amazon and Whole Foods Market Make Biggest Investment in Lowering Prices and Expanding Prime Member Deals to Date – Amazon.com/Whole Foods Market
- Can Whole Foods afford higher prices? – RetailWire
- Amazon Slashed Prices at Whole Foods. Now They’re Climbing Back Up. – The Wall Street Journal
DISCUSSION QUESTIONS: What effect, if any, do you expect Whole Foods to feel from its most recent price decreases? Is product quality and customer service enough by themselves to keep most Whole Foods customers shopping at the chain or does it need to do more price-wise?