Amazon made deep price cuts on Whole Foods items the moment it fulfilled the acquisition of the organic food chain. The price cuts were as much as 43% on premium items. Since Amazon announced the acquisition, there has been a disruption in the market, with food chain rivals experiencing price drops on their stocks.
Amazon Go is a new concept in retail which features a new customer experience: you do not need to pay at the check counter—you can just leave the store when you are through with your purchases.
Whole Foods is trying hard to compete with stores like Kroger and Wal-Mart. These bigger chains started to sell organic produce at a lower price. Additionally, these chains continue to give price cuts, thus leaving Whole Foods with overpriced products.
The Amazon acquisition gave new life to Whole Foods. Since the price cuts, there has been an increase of up to 25% on customer traffic according to Foursquare Labs.
Foursquare Labs uses data from shoppers’ mobile devices to compare the week-on-week volume of human traffic to Whole Foods. There is agreement that some of the customers go to Amazon for the hype. Some of the shoppers still made purchases even if the items in the store were comparatively more expensive than those same items found in larger chain retailers.
Amazon is an online marketing company, and has not had much success in brick-and-mortar operations. The $13.7 billion purchase of Whole Foods represents a small toehold on the retail food market. The company represents only 2% of the $800 billion market, currently dominated by Wal-Mart, Kroger and Albertsons.
The prices at large chain retailers are still lower than at Whole Foods. Some Whole Foods items can be more expensive by 50% compared to large chain stores.
Can Amazon Save Whole Foods?
Amazon’s strategy with Whole Foods seems to be more of an extension or an arm of the company, while maintaining its organic foods identity. Along with the cut in prices of some Premium items, Amazon is offering discounts at Whole Foods stores to Prime program members. Private label Whole Foods items will soon be available online through Amazon. It also started selling Amazon Echo and Echo Dot at discounted promo offer at Whole Foods.
Even before the Whole Foods purchase, the Amazon Go store was introduced to the public. There have been comments that Amazon Go can be the blueprint or the direction for Whole Foods. Amazon Go is a new concept in retail which features a new customer experience: you do not need to pay at the check counter—you can just leave the store when you are through with your purchases. Whenever you pick up an item and place it into your cart or basket, sensors and cameras will detect this and add it to your purchases. When you leave the store, the total purchases will be billed to the credit card on your Amazon account.
Whole Foods has loyal fans who regularly go to the store to have breakfast or buy food items. These are premium clients who buy a small number of items and remain happy with their purchases. Having an Amazon Go payment method used in a Whole Foods store would add to that innovative user experience and leave a bold impact on consumers.
Amazon’s innovations with Whole Foods could completely upend the retail foods industry. Clearly Amazon is correcting some of Whole Foods missteps, such as their failure to recognize that as organic became ubiquitous, pricing competition had to be taken into account. If Amazon can deliver lower prices for premium quality through Whole Foods, they stand to make a bold impact.