SHEDDING ‘PAY CHEQUE’ IMAGE

Amazon looks to cut prices while keeping Whole Foods’ reputation for premium foods

WHEN Amazon.com completes its acquisition of Whole Foods Market, chief executive officer Jeff Bezos will try to keep the grocer’s reputation for premium fresh foods while cutting prices to shed its “Whole Pay Cheque” image.

Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with WalMart Stores and other big-box retailers. That included potentially using technology to eliminate cashiers.

Amazon, known for its competitive prices, is trying to attract more low- and middle-income shoppers with its grocery push. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot programme to deliver groceries to foodstamp recipients.

Whole Foods has already been reducing prices to try to turn around its worst sales slump since going public in 1992. It has four “365 by Whole Foods Market” stores that are cheaper to build and operate than a traditional location and offer lowerpriced items aimed at younger shoppers.

Amazon is considering extending the cost-cutting effort with the no-checkout technology it’s developing at its Seattle convenience store, “AmazonGo”.

The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk, which would help Amazon differentiate itself in the brickand-mortar setting and reduce labour costs at Whole Foods stores. The employees remaining would help improve the shopping experience.

Drew Herdener, an Amazon spokesman, said the company had “no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned”.

Amazon would also look to change Whole Foods’ inventory, introducing its own private-label products to replace items deemed too expensive to have mass appeal. That fits with Whole Foods private-label push to compete on price, and gives Amazon a bigger foundation on which to develop its own food brands.

Such changes may be a long way off, and Amazon has plenty of time to change its strategy, with the US$13.7 billion (RM58.61 billion) deal not expected to close until the second half of the year.