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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

Amazon Reduces Prices at Whole Foods Market

04/09/2019

Unable to dispel the “whole paycheck” image following the $14 billion purchase of Whole Foods Market in 2017, Amazon has implemented a crash program to reduce prices in Whole Food Market stores by 20 percent. The financial implications of this strategy will be hidden among the consolidated revenue and contribution of subsidiaries in results posted by the parent company. Despite the strength of Amazon in E-commerce, the purchase of Whole Foods Market has not necessarily developed a significant presence for Amazon in food retailing comparison to Walmart and Kroger and the second-tier national stores and the vast cohort of regional and local supermarket chains.

Amazon intend cutting prices of 500 products with a focus on produce and meat. Absent a specific release by Amazon, we will not know whether the pricing strategy has lifted sales over the long term and whether lower prices will degrade the image of Whole Foods Market.

The motivation for Amazon to purchase Whole Foods Market was questioned at the time of the acquisition and is still and enigma. Perhaps the behemoth envisaged synergy with Amazon Prime or recognized the brand value of the Whole Foods name. In retrospect, Whole Foods under the management of founder John Mackey demonstrating declining same-store sales and profitability before the acquisition and had probably saturated the market among affluent urbanites in university towns. The company was also experiencing extreme competition from clones, including Sprouts Farmers Market, Fresh Market, Trader Joes and specialty food stores.


 
Copyright 2019 Simon M. Shane