Amazon Whole Foods Deal Brings Lower Prices at Grocery Chain

Amazon Whole Foods Deal Brings Lower Prices at Grocery Chain

On Monday in Washington, D.C., that meant avocados were marked down 26 percent to $1.49 apiece, while NY strip steaks were discounted 18 percent to $13.99 per pound.

Given the prime store location of Whole Foods has established, Amazon now has an entry into the $800 billion grocery business in the United States. The retail giant closed the $13.7 billion purchase earlier today. It also said its Prime subscription would become the Whole Foods benefits program, and that members will soon receive special discounts and in-store benefits. While some had subsequently recovered, most were down again after Whole Foods shareholders approved the deal and the FTC allowed it to proceed.

Melissa Golden, an elementary school teacher shopping on Monday at the Brooklyn Whole Foods, was disappointed the cuts didn't extend to a wider variety of items.

"Last time I came in, I was thinking about getting the rotisserie chicken, but it was too expensive", she said. Those who watch the industry expect Amazon to push further into grocery deliveries, among other things.

The cuts come days after Amazon promised to reduce the price of foods at its newly acquired organic grocery store. Amazon is also expanding its physical bookstores across the country. When it announced the Whole Foods deal, shares of Canada's large publicly traded grocers dropped around 4.5 per cent, on average. The two companies will invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers.

Despite its reputation as a price cutter, Amazon risks alienating the devoted customers if it lowers quality at Whole Foods, a chain that built organic into a national trend that has seeped into traditional supermarkets.

Canada's big grocers are launching their own e-commerce offerings, Kathleen Wong, consumer staples analyst with Veritas Investment Research Corp., pointed out in an e-mail. But that is not what is sending shivers down the aisles of rival food retailers like Walmart, which now controls 20 percent of the grocery market by pursuing just such a low-price strategy. Walmart, which has the largest share of the USA grocery market, is expanding its grocery delivery service with ride-hailing service Uber and announced Wednesday that it will join forces with Google to let shoppers order goods by voice on Google devices.

Check back to this post on Monday morning for details about the price changes. Organic Fuji apples are marked down to $1.99 from $2.99 a pound, and bananas are now 49 cents, down from 79 cents a pound. Walmart changed the way people shop and effectively squeezed out the little guy more effectively than any other big box store or supermarket. The FTC said last week that it conducted an investigation to see if the acquisition lessened competition and "decided not to pursue" the matter.

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