Amazon's Takeover Of Whole Foods Complete; Mixed Reaction From Shoppers

On the same day Amazon.com officially bought grocer Whole Foods, the retail giant Monday began lowering prices on a number of grocery staples, including cereal, vegetables, beef and fruit at its SouthPark store. (Amazon acquired Whole Foods earlier this summer for $13.7 billion.) In the grocery chain's store on 57th Street in Manhattan, Bloombergreports cost cuts up to 43 percent.

While Whole Foods accounts for less than 3 percent of US grocery and supermarket sales, the purchase gives Amazon a foothold in a fragile industry that can ill-afford more price cutting.

In summary, having more points of physical contact with customers is huge for Amazon.

Meat and fish prices were also cut.

"That's been the biggest boondoggle around Whole Food's neck for years", Lempert said of the supermarket's high-price reputation.

In a August 24 press release, Amazon and Whole Foods said they would bring "more in-store benefits and lower prices for customers over time as the two companies integrate logistics and point-of-sale and merchandising systems".

After sealing the $13.7 million dollar deal on Monday, Amazon is the proud new owner of Whole Foods.

It's an "opening salvo" in the grocery wars, said Neil Saunders, managing director of GlobalData Retail, and shares of other supermarkets fell on the news. But maintaining the "Whole Paycheck" moniker would go against what Amazon sees as a way to draw in a larger demographic beyond the affluent shoppers Whole Foods typically attracts.

Comedian John Oliver, host of HBO's "Last Week Tonight", ridiculed Whole Food's pricing in a memorable 2015 sketch.

Amazon's $13.7 billion acquisition of the natural-foods chain closed Monday morning
Amazon's $13.7 billion acquisition of the natural-foods chain closed Monday morning

Amazon-style discounts on food items sold through Whole Foods Market will lead to big market share gains in the grocery category, says Morgan Stanley.

"I'm going to keep coming", Knight said.

"The (profit) margins at Whole Foods probably were too high."

The marriage between the upscale grocery chain and Amazon has promised to change the way its customers shop for their groceries.

Then there's the fact that Whole Foods' customer loyalty program will be nixed and replaced with Amazon Prime instead.

Another customer noted that Amazon products like Echos and Dots are now being sold at a discount in the middle of Whole Foods' produce section.

Katie Bennett, 24, was one of many customers who said she hoped Amazon would offer delivery of Whole Foods items.

According to Wilke, the lower prices are "just the beginning" of the acquisition. "If they lower price significantly, they'll have to overcome a major hurdle with maintaining the quality".

But will the move make them more competitive and are the price drops worth it? But such reorganization would likely cause them to expand in the longer term, assuming Whole Foods is able to draw in more customers with its lower prices.

  • Eleanor Harrison