Amazon.com Inc.’s (NASDAQ:AMZN) first day as owner of grocery chain Whole Foods Market was spent cutting prices by as much as 43 percent. The marked-down items were identified with new orange signs reading “Whole Foods + Amazon.” The signs displayed the new price, the old price and a promise of “More to come.”
The price reductions covered a wide range of products. Organic fuji apples and organic avocados were marked down to $1.99 a pound from $3.49 and $2.79 per pound, respectively. The price of bananas per pound dropped 38 percent to 49 cents from 79 cents. The price of organic rotisserie chicken fell to $9.99 each from $13.99, while the price of salmon filets was down 33 percent. The price of eggs and beef also dropped
In another addition, Amazon is now placing displays for the company’s electronics in Whole Foods stores. The Amazon Echo, a voice-activated electronic assistant, was for sale for $99.99. The smaller Echo Dot was advertised for $44.99.
Amazon had made lowering prices a prime focus of its acquisition of the upscale grocery chain. Whole Foods had such an entrenched reputation for high prices that its nickname is Whole Paycheck. The lower prices could encourage some shoppers to change their shopping routine and visit Whole Foods for more products.
Amazon bought for Whole Foods for $13.7 billion, giving a nearly 20 percent premium to Whole Foods shareholders who owned the stock before the announcement. The Internet giant has enjoyed a very strong year in 2017, with shares more than 26 percent higher since the beginning of the year. That is roughly triple the price performance of the rest of the S&P 500 during the same period.
Cutting prices is a sign that Amazon is serious about taking on its biggest rivals in the $800 billion supermarket industry, like Wal-Mart Stores Inc., Kroger Co. and Costco Wholesale Corp. Wal-Mart has already invested billions into revamping the produce sections of its U.S stores and lowering prices across the board. Costco’s organic items were priced about 30 percent cheaper than the same products at Whole Foods. Germany-based retailers Aldi Stores Ltd. and Lidl, both expanding in the U.S., have made lower prices the focus of their operations.