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Amazon shakes up retail sector with price cuts

News, 28 August 2017
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SEATTLE/AUSTIN: After receiving regulatory approval last week for its $13.7bn acquisition of Whole Foods Market, Amazon said it will immediately cut prices on a range of grocery products at the high-end supermarket chain.

Starting Monday, when the acquisition formally completes, consumers can expect price cuts to several items, including salmon, beef, eggs and bananas, ahead of further savings that Amazon and Whole Foods Market intend to introduce.

“The two companies will together pursue the vision of making Whole Foods Market’s high-quality, natural and organic food affordable for everyone,” they announced in a joint statement.

“As a down payment on that vision, Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come.”

In a move widely seen as a direct challenge to rival Walmart, Amazon also announced plans to integrate its technical capabilities for the benefit of Whole Foods Market customers.

For a start, Amazon Prime, its subscription membership service that offers free shipping, will be rolled into Whole Foods Market’s customer rewards program to give Prime members special savings and other in-store benefits.

In addition, Amazon Lockers will be made available in select Whole Foods Market stores, enabling customers to have products shipped from Amazon.com to their local Whole Foods Market store for pick up or to send back returns.

The two companies also plan to lower prices by investing in other areas, such as logistics and merchandising.

“We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” said Jeff Wilke, CEO of Amazon Worldwide Consumer.

“This is just the beginning – we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together,” he added.

Commenting on the development with the Washington Post, Euromonitor analyst Michelle Grant said that Amazon is “playing to its strengths”.

“Obviously the low-cost approach is in Amazon’s DNA, and it’s something Whole Foods has been struggling with for a quite some time,” she said.

“Grocery has always been the Achilles’ heel for Amazon,” she added. “Amazon’s competitive advantage is its speed – and that’s what it’s bringing here, with quick turnaround and quick changes.”

Data sourced from Amazon, Whole Foods Market, Washington Post; additional content by WARC staff

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