Amazon is dramatically reducing prices at Whole Foods to attract new customers and bring back those who left to find lower-priced natural and organic foods at traditional super markets. The lower price strategy may be just what Whole Foods needs to win back customers after same store sales have dipped over the past two years. But will it be enough?

Why lower prices will work for Whole Foods:

  • High prices are a key reason long-time Whole Foods customers left and competitive prices should bring many of them back.

  • Millennials are driving large increases in produce sales and have a healthy appetite for high quality organic fruits and vegetables.

  • Whole Foods shoppers may be able to order some items online not stocked at their local store and pick them up at the store.

Why lower prices won’t work for Whole Foods:

  • Already in a price war, large super market chains have been lowering their price points even further – so low Whole Foods may not be able to match.

  • Convenience is important, especially to Millennials who prefer one-stop grocery shopping. Even if Whole Foods shoppers can order other items online and pick up at the store, it still requires an additional step.

  • Lower margins will make it more difficult to absorb the costs of home delivery – a strategy Whole Foods would like to pursue.

Time will tell. Stay tuned.

 

Related articles:

https://www.bloomberg.com/news/articles/2017-08-28/amazon-cuts-prices-at-whole-foods-as-much-as-50-on-first-day

https://www.bloomberg.com/gadfly/articles/2017-08-28/amazon-s-whole-foods-price-cuts-won-t-solve-its-problems

https://www.cnbc.com/2017/08/29/amazon-whole-foods-price-cuts-more-bark-than-bite.html

http://www.supermarketnews.com/news/whole-foods-slashes-prices-amazon-takes-over/gallery?slide=9

https://consumerist.com/2017/09/07/whole-foods-seeing-more-shoppers-in-wake-of-amazon-merger/