Amazon's Whole Foods era begins Monday -- with cheaper kale
The e-commerce giant plans to cut prices on many best-seller grocery items, and Prime members can look forward to "special savings and in-store benefits."
Whole Foods markets will soon take on special significance for Amazon Prime members.
It's Amazon Prime time for Whole Foods shoppers.
Amazon said Thursday it expects to complete its $13.7 billion deal for Whole Foods on Monday, with plans to slash prices on a handful of popular items at the high-end grocer immediately after closing.
"We will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards," Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement.
Amazon said it also plans to make Amazon Prime the customer rewards program for Whole Foods, offering "special savings and in-store benefits" for Prime members. The change will happen after "certain technical integration work is complete," but no specific date was mentioned.
The decision to immediately cut prices fits with Amazon's reputation as a lower-price retailer. Amazon is also known for its long-term vision, forgoing a buck today in hopes of making two tomorrow. So, it may be hoping to goose interest at Whole Foods early on to build up a base of loyal Prime members. The move should also help Whole Foods draw back customers after struggling to grow, burdened by its "Whole Paycheck" reputation and beset by increased competition from other grocers. Despite their different pricing models, both Amazon and Whole Foods cater mostly to higher-income shoppers.
Thursday's announcement is also notable because Amazon has been mostly mum about what it plans to do with Whole Foods, with many left to speculate over what a tie-up of the two companies would look like.
Starting Monday, Whole Foods will lower prices on some of its best-selling staples across its 460 stores, with Amazon promising more price cuts to come. Included in the price cuts are Whole Trade bananas; organic avocados; organic large brown eggs; organic, responsibly farmed salmon and tilapia; organic baby kale and baby lettuce; animal-welfare-rated, 85 percent lean ground beef; creamy and crunchy almond butter; organic Gala and Fuji apples; organic rotisserie chicken; and 365 Everyday Value organic butter.
The company said Whole Foods' private label products -- including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch -- will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. Also, Amazon Lockers will be placed in some Whole Foods stores.
Amazon in June announced its deal to buy Whole Foods, in what will amount to its biggest acquisition ever and its first major foray into brick-and-mortar stores. The US Federal Trade Commission on Wednesday gave its blessing to the deal.
"It sounds like it's a great win for customers," independent retail analyst Sucharita Mulpuru said of the price cuts. "Anything that helps make it more accessible to more consumers is a good thing."
She added that the lower Whole Foods prices could hurt higher-end and specialty grocers like Trader Joe's and Publix, along with Target's grocery aisles. The Amazon Prime tie-in fits with what customers would expect, she said, and gives Prime members more reason to pay the $99 annual membership.
While Amazon and Walmart have been competing more directly online, the customer bases for Walmart and Whole Foods are so different that a handful of price drops at Whole Foods likely won't impact Walmart, she said.
Walmart is by far the biggest grocer in the US, with just under 15 percent of the $800 billion market. Amazon and Whole Foods combined control less than 2 percent, according to GlobalData Retail.
Shares of several major grocers, including Walmart, Costco, Target and Kroger, all sank Thursday after Amazon made its announcement.
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