Amazon’s Plans To Shake Up Grocery Retail

Amazon has announced that its first order of business, as its takeover of Whole Foods closes today, will be to slash the prices the organic grocer’s best selling staples across all stores, to make its merchandise more affordable.

As off today, the price of responsibly-farmed salmon, organic large brown eggs and animal-welfare-rated 85% lean ground beef at Whole Foods Market will be lowered. Amazon says the two companies will together pursue the vision of making Whole Foods Market’s natural and organic food affordable for everyone.

“As a down payment on that vision, Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come,” the company said in a press release.

The implication of this announcement goes well beyond the cheaper price of organic grocery staples. Rather, it conveys Jeff Bezos’s plans to significantly shake up the grocery retail sector, much like he has done in many other categories of retail, including books and diapers, and now groceries – profoundly changing these retail sectors.

Amazon does not look like it’s scared of lowering prices or disappointing its shareholders, but it does seem headstrong about shaking things up, in a major way. This will undoubtedly put its competitors, Walmart and Kroger, on high alert, and quite possibly mark the start of a major price war in an already low margin indsutry.

As Amazon weaves its online and physical store capabilities, it will provide even more savings and benefits to its customers, for example, it will turn its Prime membership program into a Whole Foods rewards program.

“In addition, Amazon and Whole Foods Market technology teams will begin to integrate Amazon Prime into the Whole Foods Market point-of-sale system, and when this work is complete, Prime members will receive special savings and in-store benefits. The two companies will invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers,” the company said.

Amazon Lockers will also be available in selected Whole Foods Market stores. Customers can have products shipped from Amazon.com to their local Whole Foods store for pick up or send returns back to Amazon during a trip to the store.

And this is just the beginning, according to Amazon. As the two companies integrate logistics and point-of-sale and merchandising systems, it has plans to offer even more in-store benefits and lower prices for customers over time.

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