Amazon plans to use its deep pockets to make big changes at Whole Foods, saying it will cut prices on bananas, eggs, salmon, beef and more when it completes its $13.7 billion takeover next week.
Amazon said members of its $99-per-year Prime shopping club would eventually be rolled into Whole Foods' customer rewards program and be eligible for special offers and discounts. Whole Foods private labels like 365 Everyday Value, will be available for anyone to purchase online through Amazon. Announcing the plan, Jeff Wilke, CEO of Amazon Worldwide Consumer told CNN: "Everybody should be able to eat Whole Foods Market quality - we will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards".
Whole Foods has more than 460 shops with the bulk of stores in the U.S. and Canada and seven in the UK.
"The speed with which Amazon intends to adjust pricing across the Whole Foods network will force changes in the way the industry operates", Portell told FierceRetail. The acquisition will close on Monday, Amazon said in a press release on Thursday.
"It's ultimately a nice land grab", said Bill Bishop of retail consultancy Brick Meets Click, and a way to get customers "thinking about buying healthy food from Amazon". The $13.7 billion deal is set to go through August 28, and if all goes as planned, Whole Foods shoppers will see some prices drop immediately, according to the Washington Post.
"Grocery has always been the achilles heel for Amazon", Grant said.
"I believe what we will see is Amazon and Whole Foods becoming aggressive on price, " said Brittain Ladd, a strategy consultant who previously worked for Amazon on its grocery business. Shares of Wal-Mart fell by as much as 3 percent in reaction.
Amazon will place its Amazon Lockers package pickup machines in some Whole Foods stores. Whole Foods Market Inc. was founded in 1978 and it is an established USA supermarket chain that only features foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.
Food retailers like Kroger and Walmart have whittled down their prices to compete with each other and with Amazon.
"The two companies will together pursue the vision of making Whole Foods Market's high-quality, natural and organic food affordable for everyone", they said in a joint statement.
A major boon: 90% of Amazon Prime subscribers live within 10 miles (16 km) of a Whole Foods store. Amazon Prime has shown to be successful financially for the Seattle based company and has created a customer base that is very loyal. They purchase from Amazon 25 times a year on average, 11 more visits than non-Prime customers. The announcement by Amazon caused Walmart's share to drop by two percent.