Amazon Cuts Whole Foods Prices as Holidays Approach

This week Amazon.com announced that it would offer additional discounts and steeper cuts in prices at its Whole Foods Market for many groceries and organic foods that are popular during the holiday season.

Amazon’s plan was released just prior to Thanksgiving and comes following price cuts during August when the e-commerce giants completed its acquisition for $13.7 billion of Whole Foods. A Whole Foods spokesperson said the price cuts were permanent.

Investors have closely watched for more price cuts at the grocer, concerned that less expensive prices would hurt other U.S. grocers who are already struggling to remain competitive with Walmart and Amazon, which are amidst an intense market share battle.

One Wall Street analyst said it was simple, ever since Whole Foods was acquired by Amazon; this is just what the other competitors in the grocery business most feared.

He added that other grocers will have to respond with competitive responses, and it could be better products, better service and better pricing.

Stock of rival grocers from the U.S. such as Sprouts Farmers Market, Kroger and Costco all were down Wednesday in trading from 1% to 2% following the news from Amazon.

Target Corp stock move lower as well. Shares of the discount retailer were already being pressured after it forecasted earnings that disappointed for its key quarter that included the holidays.

Amazon, which entered retailing in the brick and mortar arena with is acquisition of Whole Foods could turn the grocery industry upside down with the deep pockets it has and his large presence, say analysts.

In September, prices on thousands of different items were slashed by Target including baby formula and cereal, and it said it would keep offering discounts on some of its products as well as more price cuts.

Whole Foods’ prices however remain higher than the majority of grocery stores due to it catering to clientele that are up-market.

Sprouts Farmer posted better than had been expected net sales and profit for the third quarter and increased its forecasts for the full-year.

On Wednesday, Amazon said that Whole Foods has organic turkeys for sale at $3.49 per pound for all customers, while its members of Amazon Prime will pay $2.99 per pound.

Amazon said it was also lowering prices on other items including Applegate Hot Dogs and Chobani Yogurt, and on smaller brands including Eden Foods. A study in October showed that previous cuts in prices by Whole Foods took customer away from Trader Joe’s, Sprouts Farmers and Walmart.

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