Amazon (NASDAQ:AMZN) has closed its acquisition of Whole Foods and the online retailer plans immediate changes for the upscale supermarket, including lowering prices on some items. That's good news not only for existing customers of the brick-and-mortar chain, but also for people who didn't shop there because of its prices. In the long run, the purchase will be good for people who pay $99 a year (or $10.99 a month) for Amazon Prime, but integrating deals and offers for Prime's members will take some time.
On day one, however, Monday, Aug. 28, Whole Foods will begin to deliver on Amazon's vision for the brand. That means an immediate price cut on what Amazon calls "a selection of best-selling grocery staples across its stores, with more to come."
What's cheaper now?
"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 Amazon Worldwide Consumer CEO Jeff Wilke in the press release.
Items that will be immediately less expensive include:
- "Whole Trade" organic bananas.
- Organic avocados, baby kale, and baby lettuce.
- Organic large brown eggs.
- Organic "responsibly farmed" salmon and tilapia.
- Ground beef and organic rotisserie chicken.
- Creamy and crunchy almond butter.
- Organic Gala and Fuji apples.
- 365 Everyday Value organic butter.
Wilke called these efforts "just the beginning," saying that the newly integrated companies would "continuously lower prices as we invent together."
What's happening next?
Going forward, Amazon intends to take advantage of having an increased physical footprint on top of its network of distribution centers. This will include adding Amazon Lockers in some Whole Foods locations. The lockers allow customers to order online from Amazon.com and have it sent to the store for pickup.
Perhaps the biggest change coming to Whole Foods is Amazon making Prime the customer rewards program at the grocery chain. That's obviously an added perk for existing Prime members and could coax Whole Foods rewards members to join Prime if they haven't already, but neither company has said what the change will mean for existing Whole Foods Rewards programs members nor did they offer much in the way of specifics in the press release, saying that "Prime members will receive special savings and in-store benefits."
What's very clear is that Amazon wants to add Whole Foods into the Prime universe while also making the chain accessible to more shoppers without upsetting existing Whole Foods customers. Whole Foods founder and CEO John Mackey tried to make it clear that good things were happening and the chain would not be changing its core values.
"By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market's high-quality, natural and organic food," he said in the press release. "As part of our commitment to quality, we'll continue to expand our efforts to support and promote local products and suppliers."
What does this mean for shoppers?
Amazon called its immediate price cuts -- a Bloomberg article puts some numbers to the price reductions -- "a down payment" on its vision for Whole Foods. Going forward, consumers should see more lower prices and perhaps new items on the shelves based on the online retailer's impressive ability to use data to determine what people want.
Whole Foods is going to change, but it's not going to become unrecognizable. Amazon increases its purchasing power and negotiating ability, which should allow for lower prices. What the online retailer almost certainly won't do is undermine the brand equity Whole Foods has built up over decades by lowering the quality of its merchandise. This is the beginning of the end of the "Whole Paycheck" moniker and the start of a more accessible, but still quality-driven Whole Foods.