WFM Prices Creep Back Up in Aftermath of AMZN Takeover
Bloomberg
Dec 05, 2017
Amazon.com Inc. completed its takeover of Whole Foods with a bang in August, announcing a price-cutting push that generated headlines and boosted store traffic.
But in the following months, Amazon hasn’t ushered in a new era of low prices, according to Chuck Grom, an analyst at Gordon Haskett Research Advisors. He found that a basket of 110 items at a store in Princeton, New Jersey, has actually risen about 1 percent since September.
Prices on 87 items in the basket were flat, while 10 items decreased and 13 items were higher, Grom found.
“The biggest driver of the basket going higher was fewer sale items,” he said in a note.
Whole Foods saw a jump in customer traffic in the days and weeks after it unveiled its initial price cuts, which included avocados, responsibly farmed salmon and organic apples. The chain generated headlines again last month when it announced discounts on 20 more items, including antibiotic-free turkeys.
The buzz helped bring a gain in same-store sales in the month after the deal closed. That suggests new customers may have been drawn to Whole Foods by the promise of lower prices, Grom said.
Though the basket of items is still 1.1 percent lower than before the acquisition, the onus is on Amazon to show these shoppers that it’s committed to keeping prices down, he said.
“Demonstrating lower prices to this new customer will be critical,” Grom said.