Amazon said it will cut prices on hundreds of items sold at Whole Foods starting on Wednesday, countering the grocery chain's image that shoppers required their "Whole Paycheck" to shop at its locations.
The decision to pare back prices comes amid heightened competition in the grocery segment, driven especially by Walmart's push to expand in the food-retail category, said Moody's analyst Charlie O'Shea. Amazon, which bought Whole Foods for almost $14 billion in 2017, previouslyearlier this year because of inflation.
Amazon said the price cuts will focus on produce, and that it plans to double the number of Prime member deals to 300 per store. At the same time, the company said its products sometimes cost more than at other retailers because its standards prohibit sales of food with high-fructose corn syrup, artificial ingredients and some preservatives. Whether the lower prices will be enough to lure price-sensitive shoppers through its doors remains to be seen.
"Amazon's plans to cut prices on hundreds of products at Whole Foods, as well as offer expanded benefits to its Prime members, recognizes the cutthroat competitive landscape in food retailing, led by Walmart's relentless push to continue expanding its leading market position in the segment," Moody's O'Shea said.
The grocery battle between Amazon and Walmart is likely to ramp up the pressure on other grocers, he predicted.
"While Walmart has the wherewithal and willingness to meet the Amazon threat in food, as well as a different customer demographic, other food retailers will continue to feel the pressure from the ongoing and now-escalating battle between Amazon and Walmart, with this battle continuing to impact almost all retail categories," O'Shea explained.
Amazon said examples of lower prices will be large yellow mangoes sold for $1 each and mixed-medley cherry tomatoes sold for $3.49 for 12 ounces. Prime member deals will include $2 off organic asparagus, at $2.99 a pound after the price cut, and organic strawberries for $2.99 per pound, or $2 less than they normally sell for.
Some Whole Foods workers will work overnight on Tuesday and early on Wednesday morning to switch signs to reflect the lower prices, the Wall Street Journal reported.