Until recently, few people could afford to shop at Whole Foods regularly. Now that Amazon has bought out the grocery chain for $13.7 billion, however, big changes are underway. On its first day, the internet giant slashed some of the store’s prices by up to 43 percent. The goal is to upend the way customers shop and ensure more people have access to affordable, healthy food.
The first step to addressing the store’s reputation for being overpriced (which has led some to call it Whole Paycheck) was to mark down the prices of food. Bloomberg reports that at the Whole Foods store on East 57th Street in Manhattan, organic fuji apples were marked down to $1.99 a pound from $3.49. Similarly, organic rotisserie chicken fell to $9.99 from $13.99 and organic avocados changed from $2.79 each to $1.99. All of the marked-down items have orange signs reading, “Whole Foods + Amazon.” The sign also lists that there is “More to come.”
“Price was the largest barrier to Whole Foods’ customers,” said Mark Baum, a senior vice president at the Food Marketing Institute. “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.”
60-year-old Simon Salamon couldn’t be more pleased by the marriage between Amazon and Whole Foods. He said, “It reminded me why I shop at Amazon. Ninety-nine percent of the time they have the best prices and their return policy is great. With the prices lower, I think we’re more likely to shop here every day.”
While Walmart has invested billions into lowering prices all around, it’s Costco that might be Whole Foods’ biggest competitor. The chain has a slate of organic items that are priced about 30 percent cheaper than Whole Foods, according to Sanford Bernstein. Prices can remain low, as Costco charges membership fees and sells bulk-sized goods to customers.
Now that the deal is done, only time will tell if the organic grocery chain will be successful at changing its reputation and, in the process, serving a wider clientele.