{"id":9817,"date":"2018-05-16T10:32:54","date_gmt":"2018-05-16T14:32:54","guid":{"rendered":"http:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/?guid=c57f862c3539adf7c8dc37cf215cd663"},"modified":"2018-05-16T10:32:54","modified_gmt":"2018-05-16T14:32:54","slug":"amazon-cuts-whole-foods-prices-for-prime-members-in-new-grocery-showdown","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2018\/05\/16\/amazon-cuts-whole-foods-prices-for-prime-members-in-new-grocery-showdown\/","title":{"rendered":"Amazon cuts Whole Foods prices for Prime members in new grocery showdown"},"content":{"rendered":"<p>Amazon.com Inc and Whole Foods Market are making a surgical strike in the already brutal grocery price war.<\/p>\n<p>On Wednesday, Whole Foods debuted a much-anticipated loyalty program that offers special discounts to Prime customers, including 10 per cent off hundreds of sale items and rotating weekly specials such as US$10 per pound off wild-caught halibut steaks.<\/p>\n<p>Those perks are available now in Florida and will roll out to all other stores starting this summer. Amazon previously announced free two-hour delivery from Whole Foods stores for members of Prime, its subscription club with fast shipping and video streaming.<\/p>\n<ul class=\"related_links\">\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/whole-foods-unveils-further-price-cuts-ahead-of-thanksgiving\">\u2018We\u2019re just getting started\u2019: Amazon slashes more Whole Foods prices ahead of U.S. Thanksgiving<\/a><\/li>\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/large-retailers-can-limit-what-amazon-does-with-whole-foods-stores\">Large retailers can limit what Amazon does with Whole Foods stores<\/a><\/li>\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/death-by-amazon-surprisingly-some-retailers-are-withstanding-the-online-giant\">\u2018Death by Amazon\u2019: Why some retailers are withstanding the onslaught<\/a><\/li>\n<\/ul>\n<p>The new loyalty strategy will test whether Amazon&#8217;s US$13.7-billion deal for Whole Foods brings much-feared disruption and an intensified price war to the US$800 billion U.S. grocery industry dominated by Walmart Inc and Kroger Co.<\/p>\n<p>Whole Foods, with 463 U.S. stores and roughly 1 per cent share of the fragmented U.S. grocery market, has gained momentum since the Amazon merger last summer, Whole Foods co-founder and Chief Executive John Mackey told Reuters.<\/p>\n<p>Closely watched basket size \u2014 the number of items purchased per transaction \u2014 has grown since the merger, said Mackey. He declined to offer specifics.<\/p>\n<p>Mackey is betting on Prime to convince shoppers wary of its &#8220;Whole Paycheque&#8221; reputation that it is an affordable option for more of their purchases.<\/p>\n<p>The new perks could make Whole Foods cheaper than conventional grocers for about 8 million of its customers who already subscribe to Amazon Prime, according to Morgan Stanley analysts.<\/p>\n<p>Prime members scan an app or input their phone numbers at checkout to receive the discounts.<\/p>\n<p>Still, Philadelphia-area Whole Foods shopper and Prime member Heather Kincade, 46, is going to need convincing.<\/p>\n<p>While Whole Foods&#8217; prices on staples like rotisserie chicken, bananas and avocados have come down, she still thinks some every day items are prohibitively expensive. &#8220;If I start buying dish soap and other things there, I will have hit the big time,&#8221; she said.<\/p>\n<h3><strong>LOWER MARGINS<\/strong><\/h3>\n<p>In Amazon, Whole Foods has found an owner that is famously comfortable spending away profits on new businesses or on lower prices.<\/p>\n<p>&#8220;Given how important it is for Amazon to provide value for their customers, and customers value lower prices, I would think they&#8217;d be comfortable operating Whole Foods at a lower margin while experimenting with the operating model,&#8221; said Tom Furphy, former vice president of consumables and AmazonFresh, and now chief executive of Consumer Equity Partners.<\/p>\n<p>Mackey said more rounds of cuts are in the cards.<\/p>\n<p>&#8220;Whole Foods is going to become more and more and more competitive,&#8221; said Mackey, who declined to detail how much of a haircut its suppliers will take.<\/p>\n<p>Hain Celestial Group, one of Whole Foods&#8217; biggest suppliers, says a lower profit margin may be worth it.<\/p>\n<p>&#8220;I never mind giving up margin for growth,&#8221; Hain CEO Irwin Simon told Reuters.<\/p>\n<p>Small grocers, who still control a hefty portion of U.S. sales, typically have razor-thin margins. They are under increasing pressure as German discounters Aldi and Lidl lower prices, too.<\/p>\n<p>Walmart said it will keep offering everyday low prices to all shoppers at its more than 5,000 U.S. stores.<\/p>\n<p>Kroger Co, the largest U.S. supermarket operator with roughly 2,800 stores, uses shopper data to personalize loyalty discounts.<\/p>\n<p>CEO Rodney McMullen told Reuters earlier this month that the chain&#8217;s prices will &#8220;absolutely&#8221; be lower than Whole Foods on the typical shopper&#8217;s basket of about 50 items per week.<\/p>\n<p>&#8220;It&#8217;s easy to beat somebody on four or five items,&#8221; said McMullen.<\/p>\n<p>Kroger tested an annual grocery delivery subscription but tabled it due to insufficient demand, he added.<\/p>\n<p><em>\u00a9 Thomson Reuters 2018<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Whole Foods debuted a loyalty program offering discounts to Prime customers, including 10 per cent off sale items and rotating weekly specials<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/9817"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=9817"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/9817\/revisions"}],"predecessor-version":[{"id":9818,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/9817\/revisions\/9818"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=9817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=9817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=9817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}