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Amazon-owned Whole Foods will cut prices on hundreds of items beginning tomorrow, a move that seems designed to blunt the continued perception that the chain is too-high priced.

The Wall Street Journal reports that “the price cuts affect more than 500 products and include a focus on produce and meat,” with prices “reduced by an average of 20 percent on the selected items.”

The Journal also reports that under the new cuts, Amazon Prime members will “be able to save more than before at Whole Foods, with double the number of weekly Prime Member deals and deeper discounts.”

It notes that the Amazon-Whole Foods connection has had its problems: “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.”

This is said to be the third round of price cuts at Whole Foods since Amazon bought the company for nearly $14 billion in 2017. There also was a time a few months ago when reports emerged that Whole Foods actually was increasing some of the prices that it previously had cut.
KC's View:
Clearly, Amazon is feeling some heat, with Walmart/Jet and Kroger getting a lot more aggressive and gaining traction against it.

This only makes sense; I’m sure that Amazon has always expected that its competitors would get better. Jeff Bezos is way too smart to think that he’d have the field to himself forever, and in fact his relentless focus on growth, ecosystem building and putting research-and-development ahead of profits and investor satisfaction speaks to his mindset.

I do think that it will be interesting to see how this development affects - if at all - Amazon’s plans for a new chain of grocery stores that reportedly will begin rolling out later this year. (Informed speculation is that the first one will open in Woodland Hills, California, where is no dearth of competition. It also is speculated that Amazon could acquire a smallish regional chain somewhere in the US to jump-start its efforts.)

Clearly, running supermarkets is both hard and expensive, and some of the ways in which Amazon has bent the rules (and, seemingly, some of the established laws of physics and economics) to its own will may not work as easily there. I remain a little skeptical about exactly what it may have mind with these stores, and resolute in my belief that if Amazon is going to open new stores, it has to figure which of its secret sauces it will use in them … because just opening me-too stores makes no sense at all.

(It may be that Amazon is paying attention to a Cowen & Co. study quoted in the Washington Post, saying that “curbside grocery pickup will account for $35 billion in sales in the U.S. by 2020 as it is embraced by a greater proportion of consumers.” If click-and-collect indeed is the future, then Walmart and Kroger and everybody else in the grocery business have an advantage over Amazon because they have actual curbs. But there also is another line of thinking that says delivery will soon leap-frog click-and-collect, and Amazon certainly has the advantage there. Me, I tend to think that it isn’t an either-or proposition … I think there is plenty of room for both, and that customers will use both depending on the day, the circumstance and the particular need state.)

All that said, I am looking forward to going to Whole Foods this weekend to see how the prices on the things I buy there have been impacted. One of the points the Journal makes is that Whole Foods has not been as successful at converting its shoppers to Prime membership as it expected, And I would agree that they’ve not doing nearly enough to make my Prime membership work for me there. Bezos likes to say that he wants to make Prime so valuable that not being a member is irresponsible … and I don’t think they’ve done nearly enough with it at Whole Foods.