In August, one of the largest retailers in the world took over Whole Foods. That company was Amazon. When the two companies joined forces into one, Amazon made some pretty big claims concerning prices. They announced that there would be lower prices for customers on many of the essentials that get purchased at all Whole Foods locations around the country.
This was exciting news for many customers who had been spending too much at Whole Foods, as well as for those who had wanted to shop there but could not justify the prices. Many referred to Whole Foods as “Whole Paycheck”, and for good reason-prices were generally higher than local competitors. However, after Amazon took over the popular brand, they released a press release with some good news- that prices would be dropping on many of the foods that were being bought on a regular basis. These included eggs, avocados, bananas, kale, baby lettuce, almond butter, salmon, tilapia, ground meat and much more.
However, customers soon realized that these promises didn’t hold as true as they hoped. A news report was released from researchers out of Gordon Haskett shortly after the retail giant took over. This report stated that the prices only dropped overall by 1.2% since the grocery store was taken over by Amazon.
Whole Food Prices- Increases Were Seen Instead
After Amazon took over Whole Foods, Gordon Haskett investigated the prices at one specific location in Princeton, New Jersey. The company tracked prices for a total of five weeks, beginning right after the takeover. There were some prices that did go down, such as a decrease in produce of 0.5% and a decrease in beverage prices of 2.8%. One of the highest drops was in bakery goods, with a decrease of 6.8%. But the decreases in these areas were basically negated by the price increases found in other areas of the store.
An article was published by The Washington Post discussing the various increases in prices that Gordon Haskett found. During the five-week period, frozen food prices jumped up 7% and snack prices increased by 5.3%. Dairy and yogurt prices saw an increase of 2.8%, higher than those recorded in late August of the same year.
In New York City, another study was undertaken by Tesley Advisory Group. This company examined different prices at a local Whole Foods after the takeover, only to find that they were still marked higher than the same goods found at a local Kroger and Walmart.
Customer Curiosity vs. Loyalty
Many customers do not notice the different decreases and increases in prices of their food. Shoppers are often very busy paying attention to sales, promotions and coupons and do not notice small price increases. A few cents here and there do not seem to make much of a difference to some. It certainly doesn’t mean that the consumer will stop buying a favorite brand because of a couple of pennies.
After Amazon bought the company, data gathered from Foursquare Labs indicated a jump in customer traffic. A 25% increase was noted, a remarkable jump that may have been more out of curiosity than actual need. However, paying a decent price for grocery staples always remains a great need among consumers, one that can cause major competition between chains.
Last month, Target began to lower prices on many of their home essentials. Walmart has heavily promoted their online pickup option, an easy way for customers to pick what they want from the store online and have it ready and packed for them at a certain time. The option to pay with Electronic Benefit Transfer cards for this service is also coming to many Walmart locations. Stores are constantly looking at new ways to bring in new customers and keep their old ones, as customer loyalty goes a long way when it comes to the competition.
Whole Foods may be losing the customers that were initially curious after the takeover. They may also still have a long road ahead of them to get rid of the “Whole Paycheck” nickname that has stuck for years. Customers who were loyal to the brand before Amazon took over may stick around as dedicated shoppers, but new customers may be turned off by prices that aren’t as low as they thought they would be.
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