It’s been a little more than a year since Amazon bought health-food grocery store Whole Foods for $13.7 billion. The Amazon purchase, great for a then-struggling Whole Foods, came with a corporate promise to lower the price of healthy, organic foods to make them more affordable for shoppers from all walks of life. The move was known throughout the industry as a”grocery game-changer.”
Though the purchase seemed to shock the industry at first, it was just the thing needed to fuel Amazon’s quest to change the future of groceries. And although the future of groceries hasn’t appeared to have changed much over the last year, Amazon has managed to cement themselves as the hierarchy of online (or in-person) grocery shopping.
Amazon Is Making Whole Foods Cheaper
In July 2017, just a week after the Whole Foods purchase was made public, Amazon started rolling back the prices on several of the most popular items at Whole Foods. Millennials rejoiced when avocados went from $2.50 each to $1.99. Vegan shoppers loved when the price of almond milk decreased from $3.99 to $2.99. Throughout the subsequent weeks other necessities purchased at the store saw a decrease in price as well, sometimes equivalent to a dollar or more in savings.
Other items that received a markdown include: Whole Trade bananas (which went from .79 cents a pound to .39 cents a pound), organic tilapia (which dropped from $11.99 a pound to $7.99 a pound), and organic Fuji apples (which were originally $3.49 a pound, but are now $1.99 a pound). But Amazon didn’t stop there. Lean ground beef, organic baby kale, and organic cage-free eggs, among other items, all fell victim to these massive markdowns. All in all, more than 300 items have been marked down since Amazon took over the large grocery chain. The markdowns were announced with the promise of “more to come.” But now, a year later, how did Amazon deliver?
The “necessities” weren’t the only thing to get the ultimate Amazon discount treatment. Beginning July 4th of 2018, Amazon is offering 10 percent off sale items for Prime members at all Whole Foods locations across the nation. The items included in the 10 percent off deal vary weekly, but shoppers can expect a mixture of fruits, vegetables, meat, and other customer favorites. But like many discounts, the deal comes with a catch: shoppers can only redeem the 10 percent off of sale items if they are a member of Amazon Prime.
What Does This Mean for Other Grocery Giants?
At first glance, it doesn’t appear that much has changed over the last year for the Texas-headquartered company. A majority of the Amazon changes to the company are seen within the aforementioned price changes and the slightly-out-of-place Amazon Alexa displays now-found on endcaps throughout the store. But it’s not just lowered grocery prices—it’s lowered stock share prices across the grocery industry, too.
In the hours after the 2017 Amazon Whole Foods purchase, other grocery competitors took an immediate stock-market hit. Stocks for Kroger, Dollar General, and Costco all fell as much as 6 percent within the first few hours that the Amazon purchase was announced. In the 12 months since the purchase, however, share prices for the affected grocery giants have appeared to recover nicely from the 2017 drop.
Grocery Delivery Becomes A Fierce Competitor
The Amazon purchase was timed well, especially with the increasing popularity of online grocery delivery services. Large grocery chains are doing what they can to compete with Amazon, Whole Foods, and the growing demand for grocery delivery. As a result, Kroger has expanded its delivery partnership over the last year with InstaCart, while taking a stake in the British online grocer, Ocado Group Plc. Target also took part in a $500 million acquisition of the small grocery-delivery company, Shipt, so they too would be an option for online grocery delivery. Even Costco made strides to accommodate shoppers who would rather have their meals delivered by selling Blue Apron meal kits and offering a CostcoGrocery delivery service.
Although these kinds of business moves made by the big grocery chains appeal to the digital market: they’re still falling flat. In fact, over the last year, more customers have purchased their groceries online from Amazon than from any of the other competitors with a similar grocery delivery service. Despite their efforts, though, no other company has come close to catching Amazon when it comes to grocery purchases made online. Amazon hasn’t really done much to “change the world of grocery shopping” at Whole Foods, but the unexpected 2017 purchase did leave other market competitors shaking in their boots and trying to catch up.