McMillanDoolittle logo

Whole Foods: The Price Drop Heard Round the World

Whole Foods dropped prices in their stores on the first day of Amazon’s official ownership. It is the first of what I suspect will be many new actions as of a result of this marriage and it certainly was one of the easier ones to take: make some much needed improvements of Whole Foods beleaguered price reputation.

As I visited my local store, I honestly was expecting a lot more based on the hype and press coverage. Boneless ribeye steak had been reduced from $18.99 to $13.99/lb and conventional bananas from .57c/lb to 49c/lb. Elsewhere, an avocado went from $2.50 each to $1.49 each. While these are improvements, no doubt, it doesn’t exactly take them into the realm of Walmart or Aldi. It is, as the old what do you call 100 lawyers at the bottom of the ocean joke goes, a good start.  A quick look on the Amazon website features the news, with some Whole Foods private label now available on-line.

Other changes, of course, will take longer to implement and are probably better indicators of where this future partnership might head. Amazon announced the eventual integration of Amazon Prime as the foundation of a Whole Foods loyalty program, a very fast way to add value to customers and analytics to Whole Foods which trailed the rest of the industry. Tying shoppers into the Amazon ecosystem is a powerful weapon for Amazon, which now counts half of American households as members.

Other “omni” aspects will be slower to deploy. It requires capital, systems, and physical store changes. Even adding lockers to the Whole Foods stores for pick-up can’t be done instantly.Other changes, of course, will take longer to implement and are probably better indicators of where this future partnership might head. Amazon announced the eventual integration of Amazon Prime as the foundation of a Whole Foods loyalty program, a very fast way to add value to customers and analytics to Whole Foods which trailed the rest of the industry. Tying shoppers into the Amazon ecosystem is a powerful weapon for Amazon, which now counts half of American households as members.

Less clear is the long term impact of this acquisition. Will Whole Foods help power and expand Amazon Fresh? Will Amazon use Whole Foods as in-store pick-up centers or as a way to deliver fresh products to consumers as part of a Prime Now package? To be sure, the end game of this acquisition doesn’t involve simply optimizing Whole Foods-there are bigger stakes at play.

Round one was fired today in the form of lowered prices. It will be the first of many moves that the industry will be closely monitoring.

Neil Stern for Forbes

McMillanDoolittle

info@mdretail.com

McMillanDoolittle is a premier international retail consultancy bringing deep experience with world class clients. Our partners have extensive experience interpreting the retail marketplace and converting insights into successful strategies. We help clients develop innovative solutions in strategy development, the customer experience, new concepts, brand performance, retail performance improvement and retail intelligence services.

No Comments

Post a Comment