NEW YORK -- Amazon kept its promise Monday to lower prices on some key items at Whole Foods Market, its first day as the new owner of the chain long known as high quality but high cost.
And in another hint at how the online giant plans to integrate its new network of stores with its current operations, banners started showing up to cross-promote other Amazon products. At one store, the display offered discounts on the Amazon Echo home connectivity system.
Mostly, the first day of Amazon's $13.7-billion acquisition of Whole Foods was decidedly low key. The big difference was the prices. Here, for instance, are examples from a midtown Manhattan store on Monday:
Whole Trade bananas -- 49 cents per pound , down 38% from 79 cents
Organic Fuji apples -- $1.99 per pound, reduced 43% from $3.49.
Organic large brown eggs -- $3.99 per dozen, a cut of 7% from $4.29.
"Animal-welfare-rated" 85% lean ground beef -- $4.99 pound, down 29% from $6.99.
Organic rotisserie chicken -- $9.99 each, also pared 29% compared to $13.99 before.
Whole Foods has for years been mocked as "Whole Paycheck" for its high prices, but Wall Street has already pickup up on the changes that are afoot.
The price cuts are "the first salvo in what we believe will be a period of heavy promotions throughout the grocery industry" as competitors try to figure out how to keep their own customers loyal while making money, said Moody’s retail analyst Charlie O’Shea.. He predicts larger players, like Walmart, will be able to make it through.
"As we have seen multiple times and in multiple product segments, Amazon has the advantage of not facing the same scrutiny surrounding its profitability from its shareholders as other competitors, and we believe the company will continue to exploit this in the grocery segment," O’Shea said.
Then there is Amazon's chance to sell non-grocery items, the synergy with its huge online sales operation. A large sign at the front of one of the Manhattan stores read "Farm Fresh/Pick of the season" to advertise a sale on Echo and the Echo Dot. The two-way wireless smart speakers were going for $99.99, down from $179.99; and $44.99, down from $49.99; respectively.
Amazon's expansion beyond more traditional Whole Foods grocery items didn't shock Forrester technology analyst James McQuivey. The Seattle-based online seller has determined that people who buy its devices, like Echos and Fire tablets, spend more money and more often, he said. Getting Whole Foods devotees to buy the hardware is a way to recruit new customers for its primary platform -- the Web site.
"The only thing that's surprising is that they went in on day one," he said. "You might think you don't want to annoy traditional Whole Foods buyers."
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