SEATTLE & AUSTIN, Texas -- As anticipated by many industry observers, Amazon’s first official move with its newly acquired Whole Foods Market is to lower prices, attempting to dispel the “Whole Paycheck” cost image that has clung to the organic grocer since its inception.
Here's what will happen in Whole Foods stores and what customers can expect over time as the two companies integrate …
1. Expectation of innovation
Following Federal Trade Commission (FTC) clearance and Whole Foods shareholders’ approval, Amazon’s $13.7 billion acquisition of Whole Foods closed on Aug. 28. The FTC determined that the pairing did not “substantially” lessen or constitute “unfair” competition, the agency said.
That being said, the deal promises to disrupt the brick-and-mortar grocery business by bringing Amazon’s e-commerce acumen to an already disruptive physical supermarket chain.
With Whole Foods, Amazon will have an estimated 2% share of the U.S. grocery market, according to Grocery Headquarters magazine.
“We will be joining a company that’s visionary,” John Mackey, Whole Foods Market co-founder and CEO, above, said in June. “I think we’re going to get a lot of those innovations in our stores. I think we’re going to see a lot of technology. I think you’re going to see Whole Foods Market evolve in leaps and bounds.”
Amazon is already disrupting brick-and-mortar retail in other ways. The Whole Foods acquisition joins Amazon’s new physical bookstores, the Amazon Go cashierless convenience-store test and the Amazon Instant Pickup stores where customers can pick up merchandise ordered online within minutes.
2. Lower prices
Starting Aug. 28, Whole Foods will offer lower prices on a selection of best-selling staples across its stores. Customers will find lower prices on organic products such as bananas, avocados, brown eggs, salmon and tilapia, baby kale and baby lettuce, ground beef, almond butter, apples, rotisserie chicken, 365 Everyday Value butter and more.
"We're determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality. We will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards," said Jeff Wilke, CEO of Amazon Worldwide Consumer.
"It's been our mission for 39 years at Whole Foods Market to bring the highest-quality food to our customers," said Mackey. "By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market's high-quality, natural and organic food. As part of our commitment to quality, we'll continue to expand our efforts to support and promote local products and suppliers. We can't wait to start showing customers what's possible when Whole Foods Market and Amazon innovate together."
3. Rewards integration
In addition to lowering prices, Amazon and Whole Foods will begin to integrate Amazon Prime into the Whole Foods point-of-sale (POS) system. After certain technology integration work is complete, Amazon Prime will become Whole Foods’ customer-rewards program, providing Prime members with special savings and other in-store benefits.
“We will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together,” Wilke said. “There is significant work and opportunity ahead, and we're thrilled to get started."
5. New services
Amazon Lockers will be available in select Whole Foods stores. Customers can have products shipped from Amazon.com to their local Whole Foods store for pickup or send returns back to Amazon during a trip to the store.
The companies said that they plan to offer more in-store benefits and lower prices for customers over time as they integrate logistics, POS and merchandising systems.
The company will maintain operations under the Whole Foods Market brand and will continue to offer natural and organic foods. Mackey will remain as CEO, and Whole Foods’ headquarters will stay in Austin, Texas.
In fiscal-year 2016, Whole Foods had sales of approximately $16 billion and has more than 460 stores in the United States, Canada and the United Kingdom. Amazon.com Inc. is based in Seattle.