Amazon Prime Members To Get Whole Foods Discounts

Ashley Carr
August 26, 2017

Amazon said that starting Monday, it will lower prices of items at Whole Foods like organic bananas, brown eggs, salmon, ground beef, and more. "And this is just the beginning - we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together".

In addition, Amazon Prime members will receive "special savings" and in-store bonuses once the Amazon Prime program has been integrated with the Whole Foods system.

"Change is coming much faster than anyone imagined", Neil Saunders, managing director of GlobalData Retail, said in an email.

John Mackey, the Whole Foods co-founder and CEO, will stay on as CEO after the acquisition.

Amazon's announcement comes a day after Whole Foods shareholders gave their approval and the Federal Trade Commission said it would not block the purchase. On Friday, a grocery bag of those items rang up at about $40.50 at Whole Foods - including the chicken on sale for $2 off - compared to under $34 at both Stew Leonard's and Stop & Shop, the former a local favorite and the latter the largest chain operating in southwestern CT. They were at $41.98 on Thursday. While likely boosting Prime's membership rolls, it could also induce a broader range of customers to stop more often at Whole Foods - a company that has a reputation for being too pricey for many shoppers. Now, with Amazon's backing, the chain stands to become a formidable competitor in what's shaping up to be a grocery-industry war. If the deal, which was first announced in June, closes Monday as expected, the price slashes will go into effect immediately. "That's a competitive advantage". The Kroger Co. dropped almost 8 percent. Costco lost 5 percent and Target fell 4 percent. A further development, in relation to the physical Whole Foods stores, will be the placement of Amazon's delivery "lockers" in Whole Foods stores.

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"This is how Amazon operates, " said Michelle Grant, head of retailing at Euromonitor, a market research firm.

On average, she said, supermarkets only squeeze about $1 of profit out of every $100 in revenue.

All in all, the Whole Foods concerns merely represent "a little noise here", said the analyst, who has a neutral rating on Wal-Mart.

On Thursday, stock prices of rival grocers took a hit on the promise of lower-priced goods at Whole Foods. It's a tricky balance that Amazon itself seemed to acknowledge in its statement. Given that 70.3% of Whole Foods core customers are already members of Amazon Prime, the linkage covers a significant part of the existing shopper base.

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