
Amazon's Whole Foods Price Cuts Brought 25% Jump in Shoppers - mcone
https://www.bloomberg.com/news/articles/2017-09-11/amazon-s-whole-foods-price-cuts-brought-25-jump-in-customers
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jamestimmins
As the article hints, this jump is likely driven in part by the millions of
dollars of free advertising Whole Foods received from the news, and not simply
because there were price cuts.

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joezydeco
If you live in a town with a Whole Foods, you already know it's there. And
nothing physically changed to the stores overnight.

Announcing a price cut seems way more likely to draw in comparison shoppers to
see what cuts were made, and if they compare to people's current regular
supermarkets.

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cracell
So along that line of thinking, everyone knows the McDonalds is there so
there's no reason for McDonalds to ever pay for advertising.

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mey
Most of that is advertising deals and/or new products.

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fenwick67
Those deals and products are part of the marketing/advertising, not
independent from it.

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ilamont
I am also an infrequent Whole Foods shopper. Some anecdata to share:

I went to Whole Foods the week before the announcement and then again today. I
was very sensitive to pricing on the first visit (and, frankly, was pretty
surprised at how expensive most things were). On the second visit today, I
noticed big drops in the prices of certain items, such as fish, produce, and
yogurt.

For instance, I don't think there was any fish cheaper than $15/pound before
the takeover, yet today Cobo Salmon behind the counter was $10/pound (sale)
and shrimp was $12/pound (regular price).

It was also possible to buy organic Gala apples for $1.50/pound (sale) and
cauliflower at $2.50/head (normal price).

It's not as cheap as the "normal" supermarkets in the area, but it's more
competitive than before. Of course, these could be seasonal variations -- for
instance, apples are in season in New England right now.

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tapatio
The apples you saw were picked 5-12 months ago. Source:
[http://www.businessinsider.com/supermarket-
apples-10-months-...](http://www.businessinsider.com/supermarket-
apples-10-months-old-2017-4)

~~~
wahern
No, those apples are fresh. They're cheap because it's apple season. The gala
apples on sale are probably too small to do well in long-term storage. Whole
Foods isn't the only grocer selling those, either. I bought a bag and just
noticed today that my office (a big Silicon Valley company who sources
commercially) put out bowls of the same apples (they're conspicuously small
and yellow for gala apples).

I don't get all this business about Whole Foods being expensive. I went to
Costco, Safeway, and Whole Foods this past Sunday. Per usual, the packaged,
vacuumed-sealed ground beef was <= the cost elsewhere; $4.99 at WH, $7.99 at
Costco, and $6.99 at Safeway. The chicken wasn't on sale today at WF; it was
$2.99/lb for a whole fryer that they'll chop up, though often it'll sell for
$1.99/lb. But Costco's $1.99/lb packages were sold out, and Safeway is rarely
less than $2.99 either. (WF did have organic whole fryers on sale for
$2.29/lb, but pre-packaged so they won't chop them up.) I forgot the exact
price because I didn't buy any, but the steaks at WF were no more (and perhaps
less) than the Costco steaks. You can buy cheaper steaks at Safeway, but
they're not worth the money.

Generally, for staples (meat, vegetables, canned goods) I've found Whole Foods
to be no more expensive, and often cheaper, than elsewhere, unless I'm buying
in bulk at Costco (e.g. a case of canned beans). Whole Foods can do this
precisely because people blindly buy their premium products, like prepared
foods. Whole Foods sells a huge volume of high-margin items. By contrast,
regular grocers make their profit from low-margin staples. Thus, for staples
Whole Foods will always be competitive. Moreover, because Whole Foods is
upmarket their staples (especially vegetables and meats) are often of better
quality if only so they don't detract from the overall feel of the store, and
in any event they move quicker off their shelves and are thus often more
fresh. Compare the butcher counter at WF to your regular grocer, assuming the
regular grocer even has one. I can often get freshly butchered, hormone-free
chicken for $1.99/lb (never more than $2.99/lb) at WF; at Safeway the only way
to get that price is pre-packaged Perdue chickens.

Don't get me wrong--I've walked out of Whole Foods having paid plenty. But
it's knowingly and by choice. And there are plenty of times where I've walked
out of Safeway thinking, "WTF!?".

I'm not looking forward to Amazon's cost-cutting measures. If Whole Foods
moves down market it means the premium shoppers will go elsewhere and stop
subsidizing my purchases. Amazon can subsidize the prices, but I suspect
quality and selection of staples will go down.

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olau
> The gala apples on sale are probably too small to do well in long-term
> storage. Whole Foods isn't the only grocer selling those, either.

When you say "do well", you mean they're not going to generate enough revenue?
Because big apples generally lose quality faster in long-term storage,
according to a book I inherited on how to run an orchard, from 1948. :)

Anecdotally, I find that oversize apples are typically less dense.

~~~
wahern
The skins were pretty thin and I assumed they'd dry out too quickly given the
surface area to volume ratio, notwithstanding the measures taken for long-term
storage. But you would know much better than me, as I have no domain knowledge
whatsoever.

All I know for sure is that they tasted fresh--dense, crisp, and juicy--and
didn't seem to be covered in much, if any, wax. The price partly seemed to
reflect an abundance given that we're in apple picking season; and partly
reflect their relatively small size, even for galas, and odd coloring--
strangely yellowish (I checked the stickers and the labels twice).

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mikeash
Will it last? When I heard about the price cuts, I went in to check it out. I
pretty much never shop there, so I'm part of that 25% jump. In the end I saw
no real difference and no reason to return.

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sumoboy
Amazon buys this companies and they never really seem to work out over time,
eg. zappos, diapers. Major grocery chains will just get smarter and more
aggressive with pricing.

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emodendroket
I was not aware Zappos was not considered a success.

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sumoboy
Zappos is a huge success for customer service and returns, but they've been
losing marketshare for years. Amazon just wants to show high revenue numbers
and mask operating losses. Don't think that Walmart with acquisition of
shoebuy is going to sit around and not steal revenue. Too many people think if
Amazon buys a company it's going to turn into gold, the only thing that is
goldmine is AWS. Whole Foods won't be immune from stiff competition going
forward, everybody knows there brand is expensive regardless if they drop
prices 25%.

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pbhowmic
For what I buy, it is still more expensive than Sprouts. I don't even want to
know what these items cost before the price cut.

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bozoUser
What categories did the price cut reflect in. I shop at wholefoods every week
and I have not noticed a drop in the prices of fruits, vegetables, milk and
neither in the bake/meals section.

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qudat
The most cuts I have seen were in the meat/seafood sections. Tilapia was cut
for $4-5, ribeye $6, etc.

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freyir
If Whole Foods becomes anything like Amazon, their locally-sourced grass-fed
beef could become commingled meat product from various fly-by-night suppliers
that's just "fulfilled by Whole Foods."

Amazon's inability or indifference to combatting counterfeit sellers on their
website has completely eroded my trust in eating the food they source.

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throwawayjaja1
I've ordered the natural/grass-fed (not sure if it was locally source,
probably not since it is encased in plastic, making it last longer) beef from
Amazon Fresh and I'm pretty happy with it (I'm probably not thinking
sustainably, sorry) because it doesn't spoil as quickly as the beef I buy from
my butcher counter. Side effect is that it is usually less, by weight, than
the stuff I buy in person, so I end up eating less, which is just fine. (Steak
is, for me, hard to portion into leftovers, it is a mind thing).

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tinbad
Does anyone have any data to back up the price drops? From my anecdotal
evidence it seems WF is just as expensive as it was before. I'm sure these
price cuts are only on certain products so it would be interesting to know
what these are.

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edko
They still have ridiculously high prices. For example: a gallon of Crystal
Geyser water is $1.50, while in most other places is $1.00. What justifies a
50% premium?

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xeromal
Yeah, the problem is they pay their employees living wages.

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edko
Got it. That's probably why, in the past, they invented products like the $6
asparagus water: to be able to pay living wages.

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rukittenme
I'm one of these people. I'm very price conscious and have always avoided
whole foods. But after seeing the price drop, I gave them a try. My bill was a
little more than usual. But given the convenience (its next door) and quality
I chose to continue shopping there. I've been going regularly for about a
month.

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KeepTalking
I shop at whole foods frequently mainly for fresh produce and dairy. this is
largely because of its proximity to my home. My other regular grocery chains
are my local mom and pop grocery store who is about 300 feet from my house,
Costco and target. I avoid Safeway as far as I can.

My observations are 1) my local mom and pop store carries the freshest and
cheapest vegetable produce. They are alert to my needs and are doing brisk
business with a regular clientele. They source their produce from the central
valley ave Sacramento area using a network of independent farms. 2) Costco is
great for some produce while making up the true per pound cost for other items
e.g. Tomatoes. Additionally I find Costco produce to perish faster. 3) whole
foods has dependable produce but at over 50% Mark ups.

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X86BSD
My thought about this merger is, if I am HyVee or Price Chopper or whatever
your local regional chain supermarket is HOW am I going to survive Amazon?
They are past firing across the bow of every grocer in the US, and none of
them seem to be moving to survive the Cat 10 hurricane that is Amazon. Few
deliver, few have automated inventory with robots, I don't see any of them
moving to compete or stem the blood bath that is coming. It reminds me of Palm
and its arrogance when Apple entered the mobile phone market.

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Overtonwindow
I've been trying new diets and focusing on reducing my intake of GMOs,
specifically corn. For this I've been shopping at Wegman's quite a bit,
avoiding Whole Foods which is closer, because of the prices. This article
gives me a little hope WF is getting better. Good food costs money, at least
that's what we're told, so I'm happy to see things getting more competitive,
at least.

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elvirs
because all news outlets advertised the bs price drops at wholefoods even if a
recent article said prices were down by just 1% on average.

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bhhaskin
The real question is how long until Amazon starts to raise the prices again?
It's a smart PR move if you think about it. Lower prices to get more shoppers
in the door and then slowly raise prices to pre sale values. They already know
people will gladly pay the higher prices.

~~~
fullshark
That's not Amazon's MO, or goal with the Whole Foods purchase. They want to
dominate the grocery industry like they dominate the durable goods industry.

~~~
bhhaskin
Making money is their MO. It comes down to simple supply and demand, and it
makes prefect sense to raise their prices slowly overtime.

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BinaryIdiot
While that makes sense in a generic, economic theory, this isn't how Amazon
has operated. Ever. So I don't see why you're picking this hill to die on.

My money is on Amazon doing what they have always done: compete with wide
selections and the cheapest pricing possible while using Whole Foods to bring
their Fresh delivery service to far more markets at a higher efficiency.

~~~
gozur88
I agree with this. It's gotten to the point that when I need something I buy
it from Amazon, with the only exception being food. And that last part might
change.

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throwawayjaja1
I'm already buying everything I need from Amazon other than food... and since
Amazon Fresh I've been buying food once per month, sometimes twice per month,
as a Friday morning "no shopping trip for this weekend" move - in fact I spend
less than I would have at Harris Teeter based on past experience.

I would have done this with Peapod etc but their website was lacking in 1)
choices (Amazon will get you pretty much any food item) and 2) delivery window
and 3) unattended delivery

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kozikow
Different anecdote: I am not regular whole foods, but went out of curiosity
whether there will be any event related to amazon buyout or just check out if
there any significant price drops.

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arbuge
But will they stick around?

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alttab
So, supply and demand curve is still relevant it seems.

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yardie
Announced price cuts. We've been in WF before and after the buyout. Didn't see
much difference. Still prefer to go to farmers markets and discount grocers
like Aldi's.

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cs702
Customers LOVE it when businesses don't make money!

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k_sh
That's exactly how free markets work - "Your profit margin is my opportunity".

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otakucode
It's almost like most people are underpaid and most products overpriced. What
a revelation!

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iamleppert
People here are smart enough to realize what this is: a publicity stunt.

Even if you have money, shopping at Whole Foods is foolish. Amazon reduced a
fraction of the items prices, they are still heavily over-priced, and the food
quality for the price is low. Whole Foods is a grocery store that prices it's
food high to attract a certain type of consumer. That's all.

If you want high quality food, I encourage you to visit a local farmer's
market. There is probably one close to you every week, or every other week.
There are even larger ones or speciality ones less frequently (monthly).

At a farmer's market you'll get high quality produce, fresh that is directly
from the farm. All or most of your money will be going to people actually
growing or making the food, not a large corporation, food distributor, or
Amazon.

I really wish we would just ban grocery stores for good and try to go back to
this form of food consumerism.

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cortesoft
I am not sure farmer's markets are prepared, and perhaps could never be
prepared, for the type of volume they would have to do to entirely replace
grocery stores.

As someone who lives in a big city, grocery stores here are packed at all
hours. There will be dozens of checkout lines open going through customers as
fast as they can. There are a ton of grocery stores, too, with each one as
busy.

Farmer's markets are clearly not as effecient at serving customers as a
supermarket, which means they would be even more crowded. We would have to
have a LOT more of them to replace all of the supermarkets, and they would
take up a lot more space than the current supermarkets to serve the same
number of people.

As a busy parent of a toddler, grocery shopping already takes up a lot more
time than I want it to. I can't imagine trying to fit the extra time it would
take to shop at a farmers market for everything into my schedule.

When we think about making some sort of massive change to the way we live our
lives (like everyone doing all shopping at farmer's markets), we have to
really think about what it would mean to operate at that scale. What might
work great for you as an individual may not work for everyone in the world, if
everyone were to change their behavior.

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iamleppert
You can't fit in an hour every weekend to go get food, that's cheaper and
better quality than a grocery store to feed you and your family?

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vkou
An hour of a software engineer's time is worth ~$30-50. At least, many of them
happily pay that much for someone to do an hour's worth of chores for them.

Unless you're buying industrial quantities of food, I doubt a trip to the
farmer's market will save you $40. The quality difference is also difficult to
quantify. Onions and potatoes from the farmer's market aren't any healthier
then onions from the supermarket.

And here's the elephant in the room - at any particular time of year, most of
the food that you eat is not in season where you live. If it's not in season,
you're not going to get it from your farmer's market (Unless said farmer is
reselling it from a wholesaler - which a lot of stalls do.)

Do you spend an hour a week churning butter by hand, or do you pay someone
else to do it for you?

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iamleppert
Oh there we go with the "my time is worth $50/hr" thing.

By that kind of reasoning, how much money can you save by reducing how much
time you sleep by an hour each night?

Or maybe if I add 10 people to your project you'll get it done 10x faster?

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webnrrd2k
Additionally, just think how much money software developers could save if they
paid $25 an hour for someone to sleep with their wife!

Esitmating 1 hour a week, and an average salary of $50, that's an extra $25
per week, or $1300 a year!

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jaclaz
... and if you pay via Credit Card, you can probably have a 2% cashback, too.

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CodeWriter23
I went in last week to pick up a couple of things. The store was extra insane
with people. I looked but didn't see anything marked down. My thought as I
exited: "suckers".

