Whole Foods prices to fall
Amazon is moving swiftly to make big changes at Whole Foods, saying it plans to cut prices on bananas, eggs, salmon, beef and more as soon as it completes its $13.7 billion takeover next week.
Looking ahead, Amazon hopes to give Prime members special savings and other in-store benefits. The moves fit in Amazon’s track record of keeping prices low to lock in customer loyalty.
It’s an “opening salvo” in the grocery wars, said Neil Saunders, managing director of GlobalData Retail, and shares of other supermarkets fell on the news.
“Rivals should be under no illusion that they are now dealing with a competitor that is not afraid to damage profits and margins if it creates long-term gains,” Saunders said in an analyst note.
Amazon’s announcement that it plans to close the deal Monday comes a day after Whole Foods shareholders approved the deal and the Federal Trade Commission said it would not block the deal. Amazon will pay Whole Foods shareholders $42 per share, marking an 18 percent premium from its stock price the day before the tie-up was announced on June 16. They were at $41.98 on Thursday.
Whether Amazon will succeed in the fiercely competitive grocery segment is unclear, but customers are going to benefit from the attempt, said Charlie O’Shea, lead retail analyst at Moody’s Investors Service.
“Amazon can come in and price items very low,” he said. “Its shareholders are agnostic about profit, and seem more interested in revenue and market share. That’s a competitive advantage.”
Amazon said certain Whole Foods products will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now.