Amazon Is Slashing Whole Foods' Prices By 20 Percent On Hundreds of Items (wsj.com)

An anonymous reader quotes a report from The Wall Street Journal: Amazon is planning to cut prices on hundreds of items at Whole Foods stores this week (Warning: source paywalled; alternative source), as the e-commerce giant seeks to change the chain's high-cost image amid intense competition among grocers. The price cuts affect more than 500 products and include a focus on produce and meat, according to documents viewed by The Wall Street Journal. The move comes after Whole Foods raised prices on select items in February, mostly consumer products, as suppliers increased their prices because of higher transport and ingredient costs.

The latest cuts -- which are set to drop at Whole Foods stores on Wednesday -- are some of the broadest since Amazon bought the grocer for nearly $14 billion in 2017. Prices will be reduced by an average of 20 percent on the selected items. The e-commerce giant has tried to extend its own reputation for low prices and convenience to Whole Foods, to counter a sense among some consumers that shopping there required a "Whole Paycheck." The discounts include more produce and meat products than the earlier cuts. The price of organic-rainbow carrots, for instance, will drop by $1, to $1.99, and the price of Black Forest ham will drop $3 a pound to $9.99. The companies also said Monday that Amazon Prime members would be able to save more than before at Whole Foods, with double the number of weekly Prime Member deals and deeper discounts. The report adds that the price cuts are expected to last at least through the end of the year.

Comments

Loss leaders are a key factor

[WillAffleckUW]

Most grocery chains use loss leaders to bring people into stores. Resetting the prices for meat and produce means people in the market for that will come in, and then they can put such items in places that have you pass by other items they haven't marked down "oh I need eggs, oh I need yogurt, oh I need a Prime Steak, since I get a 20 percent discount" and then you feel like you won, even though your bill isn't really that much lower.

Except people like me, who buy the cheap things in bulk and visit 2-5 stores a week on our way home, buying only the sale items at each venue. For most people the time element means they'll spend their whole paycheck there (hence the original nickname for Whole Foods, which is Whole Paycheck). Which is sub-optimal. It's also why you buy lottery tickets that return only 45 cents on the dollar. You think you win, but you don't. Buy raffle tickets instead.

Re:Loss leaders are a key factor

[ShanghaiBill]

If you are shopping for premium produce at low prices I recommend the Hispanic store.

Asian stores also have fresh produce at low prices. I live in San Jose, and there are plenty of Asians here, as well as plenty of Hispanics.

Re:Loss leaders are a key factor

[WillAffleckUW]

They're loss leaders in that chain, not as an objective whole. I can literally go to six stores in Seattle that sell produce far cheaper, and yes, they do tend to be Asian stores. Examples are at NE 65th and University Way, NW 65th and 15th, one near the VA hospital, two in the international district.

The question is, are they loss leaders in the sub area (e.g. stores near the Whole Foods, which are in Magnolia (wealthy neighborhood), South Lake Union (wealthy neighborhood). If they are, they may attract people nearby who then won't bother driving to Southcenter to get cheaper goods, or go to Costco.

I frequently find even QFC (which tends to be more upmarket) to have specials on meats that are lower than even Safeway.

Re:Loss leaders are a key factor

[ShanghaiBill]

The produce at the Asian/Hispanic stores is about half the price at mainstream stores like Safeway, and about a quarter the price at Whole Foods.

They also have some vegetables and fruits you will not see in mainstream stores.

The only vegetable you find in mainstream stores that they lack is brussel sprouts. The Asians and Hispanics have enough sense to realize that when God created brussel sprouts He was JOKING. They were never meant to be taken seriously and eaten as food.

Re:Loss leaders are a key factor

[Shaitan]

No, he is treating the meaning of a term as semantics. You keep using the term "loss leader" and I know it doesn't mean what you think it means.

It's pretty straightforward, a loss leader is when you sell something AT A LOSS in order to lead people to your profitable items. Microsoft sold the XBOX at a loss for years to lead people toward the licensed content they made money on. That is a loss leader. Walmart operated their own grocery at cost (which is a net loss) and sometimes even a gross loss to undercut competition's prices until they drove most competing grocers out of the market. That is a loss leader.

Some store selling something for a slightly lower net profit than could get is not a loss. That is just a sale. Sale items are not loss leaders unless they are actually taking a loss on them. How are you supposed to discuss the economic principle if you don't use the correct term? The same economics don't come into play if you don't, you know, have to offset the LOSS.

Re:Good

[Shaitan]

Drive better pricing for everyone? I applaud cuts but the example prices are still about double market rates. They need to cut prices in half again just to be on par.

Re:Well gee.

[thevirtualcat]

Yeah. "80% of your paycheck" just doesn't have the same ring to it, does it.

Amazon is insufficiently managed.

[Futurepower(R)]

Quote from the story: "The report adds that the price cuts are expected to last at least through the end of the year."

I'm guessing that means that the prices will be sneakily raised later.

I've seen a lot of insufficient management on Amazon. There are many misleading items on Amazon. For example, this King Size 100% Cotton Sheet Set was advertised as costing $7.45. On Amazon it says "+ $11.55 shipping". The true cost with shipping is $19. The top reviews say that the sheets are not cotton.

Amazon bought "Whole" Foods and extended its business when Amazon managers are not managing the core business well.

Re:Amazon is insufficiently managed.

[Rei]

It's a common but sneakier technique: you cut prices on "daily staples" but not everything else, because it's mainly the staples that people price shop on. So they look at the price on the bread, milk, etc and see, "That's pretty similar to that other, more downmarket grocery store", and don't notice how much more non-staples cost.

Re:Amazon is insufficiently managed.

[Shaitan]

"Wow, commenting on a non-Tesla story. Have the shill payments from Musk run dry?"

Seriously go with a new target, there are so many worthy to troll around here. I've clashed several times with Rei but she is not and has never been a shill. She makes strong and well presented arguments and interjects informative comments regularly. Especially on science and engineering related topics. Or at least she did pretty regularly for the past several years. Hopefully the trolls haven't made her retreat, we'd be worse off for it.

Re:Well gee.

[bill_mcgonigle]

We won't be able to call them "Whole Paycheck" anymore. Rats.

People shouldn't shop at grocery stores where they can't afford the prices. I rarely go into a Whole Foods and only then for specialty items. I don't have an unlimited supply of money, and it sounds like the complainers don't either. I have better things to spend the delta on food prices on.

These entitled morons might not believe that the vast majority of the population cannot afford to shop there either. It's "groceries for rich folk" and that is fine but not everybody is rich and people who aren't rich should shop where the prices are better.

I hate to get all "latte and avocado toast" here, but how many people who complain about the cost of Whole Foods also can't afford a downpayment on a house?

Re:Well gee.

[roc97007]

I don't think Whole Foods is entirely "groceries for rich folk". I like to think that, if you're making a reasonable wage (middle to upper middle class), you can afford one expensive thing, if you're not concerned over much with having something for emergencies or retirement. So, you could have, say, an expensive car, or a nice condo, but probably not both.

Or, you could have a rat car and live in a single-wide, but buy pretentious groceries. :-) And apparently for some people, the feeling of paying extra for excellence in ... groceries (I'm sorry now that I write that it seems ridiculous) is enough for them.

But your point is valid. If you're rich and want everyone to know it, the Whole Foods grocery bags in the back of your Porsche Cayenne are probably a good start.

Re:20% margin

[Areyoukiddingme]

They really had a 20% margin to spare, or this is an April fool's joke?

There was a reason they were called Whole Paycheck. They really did have a 20% margin to spare, and then some.

Unfortunately for them, this is a mistake. They can't move down market without losing the people who shopped there specifically because it was upmarket enough to keep the riff-raff out, and they can't move down market enough to pick up enough riff-raff to make up the difference. Unless they stop selling asparagus water. That'd help.

Another Amazon problem: No longer direct download.

[Futurepower(R)]

I bought TurboTax 2018 from Amazon. Then, I discovered that Amazon does NOT allow a direct download. It is necessary to download and install an Amazon program, and then use that to download what you have bought. So, Amazon has apparently arranged control over customer's computers!

I will ask the TurboTax company for the SHA-256 of TurboTax 2018.

In the future, I will be FAR more careful about buying from Amazon.