Six months ago, Amazon shook up the grocery industry by completing its purchase of Whole Foods Market. And the online retailer did it with flash.
On Aug. 28, the day Amazon and Whole Foods sealed their $13.7 billion deal, Amazon immediately slashed prices of some items at the Austin-based grocer, which has become known for its “Whole Paycheck” image.
At that time, the American-Statesman checked prices on a basket of 25 items at Whole Foods’ headquarters store in Austin. The list compared Aug. 28 prices to prices right before the sale’s closing -- on Aug. 25. The basket showed that several prices on items had indeed dropped, while others remained the same and some even rose.
On Wednesday, half a year to the day of the closing, another price check at the Whole Foods headquarters store revealed that the same 25-item basket was 6 percent lower in price when compared to the Aug. 25 check.
The basket, which included popular items such as Organic Hass avocados, Fuji apples and organic eggs, totaled $102.06 before tax, $11.10 less than on Aug. 25 and $4.10 less than on Aug. 28.
Organic Rasberries, 6 oz.
A sample look at Whole Foods prices before and after the sale to Amazon.
|6 months after:|
Items such as Hass avocados, 365 brand organic extra large eggs and conventional 85/15 ground beef kept their lower price as seen on Aug. 28, while items such as organic raspberries and Organic Heirloom tomatoes decreased in price for the first time since the American-Statesman’s first check. A pint of conventional blueberries continued to decrease, down $1.70 from Aug. 25 and 70 cents lower than Aug. 28.
Items that stayed the same price since both Aug. 25 and Aug. 28 included conventional Fuji apples, a half-gallon of 365-brand conventional milk, a 12-pack of La Croix sparkling water, 365 brand salted butter and a loaf of Dave’s Killer Bread.
The only item in the basket that increased in price since the previous two checks was Noosa yogurt, which rose by 29 cents to $2.29. A loaf of country french bread, which had dropped from $4.99 on Aug. 25 to $4.79 on Aug. 28, went back up to $4.99.
Some additional items that were checked in August, such as organic 85/15 ground beef and Coho salmon, were not being sold at the store on Wednesday. Some of the items checked, such as the organic raspberries, were lower in price because they were on sale.
Amazon and Whole Foods’ vision is to lower prices while trying to maintain the high quality of food that Whole Foods has been known for, Whole Foods spokeswoman Brooke Buchanan said this week.
“While our culture will naturally evolve, the fundamentals of Whole Foods Market -- our high quality standards and our team members’ passion, spirit of innovation, philanthropy and commitment to exceptional customer experience -- will always be part of who we are and how we do business,” Buchanan said in an emailed response.
While Whole Foods’ prices have been a focus for customers since the merger, they are not the only changes Amazon has brought to Whole Foods during the past six months.
Amazon recently began offering two-hour delivery of Whole Foods products through the online retailer's Prime Now service, and Amazon has also made Prime Now its customer rewards program at Whole Foods, with Prime Now shoppers receiving 5 percent back from their Whole Foods purchases if they use a special Prime Visa card. Non-Prime members will receive 3 percent back with the same card.
Additionally, Whole Foods has also been changing the way it does business with its suppliers and promoting its brand through new advertisements.
The grocer said it will soon require some suppliers to pay new fees for having their products moved on shelves or brought into new stores, and it’s also asking suppliers to cut prices by a larger amount if they want nationwide promotions in stores’ most visible spots. Whole Foods also recently released new ads that focus on the brand’s food expertise, family friendly store atmosphere and in-store features like beer and wine bars.
The changes in their entirety show that Amazon and Whole Foods’ interest go beyond pricing and into developing the brand as a whole, said Darren Seifer, a food and beverage analyst with market research firm NPD Group.
"What all of consumers are expecting from retail now is giving them an experience. It's not just to buy a product and leave. It's to have an experience in the store," Seifer said. "I'm going to be looking out for how much more Whole Foods products will show up on Amazon, and how the (produce) aspect will show up on Amazon because we're seeing that competition ramp up with Target and Walmart testing the market to see how people can get more selective with fresh foods."
Still, many customers will focus on the changes in Whole Foods' prices, Seifer said. It's a factor that the entire industry will continue to watch, he said.
“Amazon is trying to shed the 'Whole Paycheck' stigma at Whole Foods, and they clearly identified some key categories where they didn't think they were competitive and dropped some prices," Seifer said. "Groceries are an expense that we are always trying to keep in check. What we are also doing is consuming more fresh foods, which requires more time, so we are also looking for convenience, and that's why we are seeing e-commerce trying to grow.
“We are at a tipping point when it comes to e-commerce and foods because we always had more demand for more convenience. But the technology also now seems to be there."