Whole Foods' Lower Prices Were Too Good to Be True
For loyal Whole Foods customers, fears of Amazon’s buyout were assuaged when the company made a slew of advancements and said they would help shed the “Whole Paycheck” image associated with the grocer. For a while, many were hopeful for the future of the fan-favorite supermarket and excited to see how Amazon would disrupt the grocery industry.
Five weeks have passed since Amazon officially began operating Whole Foods Market, and a price analysis by New Jersey-based research firm Gordon Haskett shows that things really haven’t changed that much.
The Washington Post reports that Gordon Haskett tracked prices on more than 100 grocery items over the five-week period at a Whole Foods located in Princeton, New Jersey. The firm reported that, on average, prices are only down about 1 percent since Amazon took over, the Post says.
You might immediately remember seeing newly discounted (and highly advertised) items at your local Whole Foods – things like avocados, a carton of eggs, and popular branded products within their private label, 365. Yes, there are a few cuts that Whole Foods has made since new management came in – Washington Post shares that beverages are 2.8 percent cheaper, the prices at the bakery are down nearly 7 percent, and produce is about .5 percent less expensive as well.
But these price drops were noticeable given the products' everyday popularity – behind the scenes, some prices were actually rising, like the products in Whole Foods’ frozen section, which the research firm found to be 7 percent higher in September than in August. The cost of snack products has also surged more than 5 percent over the last five weeks, and the dairy section is about 2 percent more expensive than it has been.
Out of the 110 items that Gordon Haskett tracked, prices decreased for 17 items – but the firm also saw price increases on 16 other items. And 70 percent of items they’ve tracked saw no price difference at all.
It seems that price innovation hasn’t come as easily as other advancements to the grocer – Amazon has netted nearly $1.6 million in sales through its online platforms and services, including Amazon Fresh and Prime Now, since the high-profile buyout. The Post reports that the first week following the deal saw 93 percent of Whole Foods' products available through Amazon completely sell out.
The issue is that consumers are now increasingly coming to expect low prices for quality products – with stiff competition from newcomers like Lidl and Aldi, and with well-established chains like Walmart making strides to incorporate innovative new approaches to business, will the average shopper return to Whole Foods?
Amazon may think so as of right now – the Washington Post says that the location-based app Foursquare reported a 25 percent increase in foot traffic for Whole Foods following the merger. But heavy publicity on the grocer’s attempts to shed an image of being wildly overpriced isn’t serving Amazon well given that they’ve yet to deliver on their promise.