Whole Foods just got a lot more affordable thanks to Amazon

Amazon raises the stakes in grocery price war

Last week, with the completion of the purchase on the horizon, Amazon announced that customers would immediately see lower prices on some items at Whole Foods stores.

The companies, which outlined their plans in a joint statement last week, are wasting no time making changes that will affect their customers.

How did Amazon decide which Whole Foods items to discount?

But the potential integration of the two companies could eventually go much further.

Amazon's move to cut prices at Whole Foods drew excited responses from shoppers on Monday. The lockers allow customers to order online from Amazon.com and have it sent to the store for pickup. Whole Foods now has about 470 locations in the USA and Europe but is expected to open more under Amazon's umbrella. Cowen & Co. expects it to become the third largest by 2021.

The Kemps, a couple from Newark, said that it was their first time at a Whole Foods Market. Its shares tumbled 9.8 percent on Monday, compared with the 2.7 percent drop for Supervalu and the less than 1 percent decline for the remainder of the group. He didn't think Amazon would cut prices this quickly, though. A lot will depend on how deep the price discounts are. That means an immediate price cut on what Amazon calls "a selection of best-selling grocery staples across its stores, with more to come".

In a sign of how the retailer is changing, the Amazon Echo, a voice-activated electronic assistant, was also for sale, for $US99.99 ($125.50) - a sharp pivot into electronics for a company known for kale and quinoa.

The organic supermarket is located downtown inside the elegant Hahne mixed-use building on Broad Street, home to several businesses and offices, including a Petco and Express Newark university-community collaboratory, along with 160 market-rate and affordable apartments. After all, Amazon has never anxious about turning a profit. Much like for its core online marketplace, where segment op. margins in FY16 were ~2.9%, AMZN is willing to sacrifice profit margins for an extended period, to gain market share and customer loyalty (op. margins at WF in '16 were 5.5%). The company has 460 shops with the vast majority in the U.S. and Canada and seven in the United Kingdom, where prices were also dropped by up to 33pc.

Above: Food prices have risen faster than the overall inflation rate. "I thought it was interesting because I heard about Amazon buying Whole Foods", she said. "We can't wait to start showing customers what's possible when Whole Foods Market and Amazon innovate together".

The simplest way for Amazon and Whole Foods to quickly expand their footprint enough to seriously threaten Canadian retail giants in Canada would be to acquire an existing company, according to National Bank of Canada analyst Vishal Shreedhar. Included in their healthy and high-quality private label products is their frozen seafood brand Whole Catch, which has items like seasoned Alaskan cod cakes, swordfish steaks, sea scallops and more.

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