Amazon.com Inc. AMZN 1.88% is planning to cut prices on hundreds of items at Whole Foods stores this week, as the e-commerce giant seeks to change the chain’s high-cost image amid intense competition among grocers.
The price cuts affect more than 500 products and include a focus on produce and meat, according to documents viewed by The Wall Street Journal. The move comes after Whole Foods raised prices on select items in February, mostly consumer products, as suppliers increased their prices because of higher transport and ingredient costs.
The latest cuts—which are set to drop at Whole Foods stores on Wednesday—are some of the broadest since Amazon bought the grocer for nearly $14 billion in 2017. Prices will be reduced by an average of 20 percent on the selected items. The e-commerce giant has tried to extend its own reputation for low prices and convenience to Whole Foods, to counter a sense among some consumers that shopping there required a “Whole Paycheck.”
Amazon also is seeking to keep up with other big food sellers. Walmart Inc., Kroger Co. and other grocers are holding down prices to defend their share of the $1 trillion U.S. market for groceries and consumer products. Amazon intends to open a new line of grocery stores independent from Whole Foods as early as later this year.
Some Whole Foods employees are scheduled to work overnight Tuesday and early-morning shifts on Wednesday to switch out tags to reflect the new prices and to hang orange signs promoting them. The cuts are expected to last at least through the end of the year, documents show.
The discounts include more produce and meat products than the earlier cuts. The price of organic-rainbow carrots, for instance, will drop by $1, to $1.99, and the price of Black Forest ham will drop $3 a pound to $9.99.
A Whole Foods spokeswoman said the companies have said they would continually drop prices at the chain since the acquisition.
Plans for the latest price cuts were kept under close wraps. Employees in recent weeks discussed them as secret projects with code names, one person familiar with those discussions said. Few workers at the nearly 480 Whole Foods stores in the U.S. were aware of the coming cuts, employees said.
Amazon and Whole Foods said this is the third round of price cuts. After the deal between the two companies closed in August 2017, Amazon slashed prices on bananas, avocados, eggs and dozens of other items at Whole Foods. Last year, Amazon started offering a further 10% discount on sale items for members of Amazon’s Prime subscription program, which gives customers other perks for a $119 annual fee.
The companies also said Monday that Amazon Prime members would be able to save more than before at Whole Foods, with double the number of weekly Prime Member deals and deeper discounts.
Amazon has introduced free, fast Whole Foods delivery in more than 60 markets for Prime members. Some customers have said service suffers from problems such as missing items and poor substitutions that are common to grocery delivery.
Amazon ownership hasn’t brought as many Prime members into Whole Foods stores as some analysts expected. A recent survey of 1,668 shoppers by Wall Street firm Wolfe Research found that 11% of Prime members said they shop at Whole Foods several times a month; by comparison, 65% of Prime members shop on Amazon’s website at least that often.
Wolfe said lower prices would likely help Amazon draw more prime members into its natural grocery chain.
At internal meetings, store managers have predicted that lower prices could boost traffic to their stores, according to a person familiar with the discussions. Others have voiced concerns that lower prices could hurt their operating budget, at least in the short-term.
Corrections & Amplifications
An earlier version of this article incorrectly spelled the name of Wolfe Research.
Write to Heather Haddon at heather.haddon@wsj.com
https://www.wsj.com/articles/amazon-cuts-more-prices-at-whole-foods-11554146071
2019-04-01 20:45:00Z
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