Whole Foods prices are about to fall

In the 23 years Amazon has been in business, he has done it again and again – with books, diapers and now groceries – fundamentally changing entire retail categories. Those now effectively function as warehouses for the Amazon Fresh delivery service, says Phil Lempert, a grocery industry analyst.

In a press release detailing the imminent closing of its $13.7bn acquisition of Whole Foods Market, the e-commerce player detailed numerous changes which are set to transform grocery shopping.

Amazon will place its Amazon Lockers package pickup machines in some Whole Foods stores.

As Amazon founder and CEO Jeff Bezos has famously said, “Your margin is my opportunity”. “The war for retail will be won in groceries”.

Amazon plans to slash prices immediately. “But open up your Amazon app and you can order dinner from Whole Foods and maybe some toilet paper”, explained venture capitalist Adam Salomone to theBoston Globe. The release also emphasizes that the Whole Foods commitment to using local, natural, and organic farmers and products whenever possible will stay in place. “Everybody should be able to eat Whole Foods Market quality”. But under Amazon, those stores will be turned into warehouses that can distribute groceries to homes around the country. If Amazon is soon able to achieve a seamless view, traditional retailers will also be pressured to “stop viewing their worlds by channel”, he said.

There is room for expansion, as well.

The planned price cuts would have been a tough sell to Whole Foods’ investors, who had grown used to fat profits from the upscale chain, but are more in line with Amazon’s broader strategy of sacrificing short-term profit for long-term market dominance.

“There was a lot of speculation that Whole Foods might be left as more of an independent entity, at least in the beginning phases of the acquisition”, she said. The Whole Foods deal is yet another way for Amazon to attract more members.

In addition, the two tech teams are integrating Amazon Prime into the Whole Foods POS system so that Prime members can receive special savings and in-store benefits. 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. By then, Amazon Prime could become a one-stop shop for all consumer needs, from groceries and clothes and home appliances to on-demand entertainment and concert tickets.

“It’s an extremely large undertaking”, Smith said. One advantage these chains had over Amazon was their brick-and-mortar stores. “Amazon is taking omnichannel seriously, and they are moving fast”.