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Amazon’s announcement Monday that it would cut prices an average of 20 percent on more than 500 grocery items at its Whole Foods grocery subsidiary follows a price increase on as many items just a few weeks ago.
The lesson for shoppers, supermarket analysts say, is to enjoy the savings—which Amazon says will focus on “high-quality, peak-of-season produce, including greens, tomatoes, tropical fruits, and more”—but not to expect your overall Whole Foods grocery bill to go down too dramatically.
“If it’s just five hundred or so items, it’s not that big a deal,” says David Livingston, CEO of DJL Research, which does analysis and consulting on the grocery industry, and is based in Honolulu.
“They have probably 20,000 or 30,000 SKUs in the store,” he says, using the retailing term for a stock keeping unit, or discrete product. “What they’re not telling you is they may be marking up prices on everything else.”
The Wall Street Journal reported in mid-February that Whole Foods discreetly raised prices on more than 500 items, mainly packaged goods.
Shoppers Should Be Skeptical and Smart
In a press release issued Monday, Amazon mentioned several fresh items, including large yellow mangoes, $1 each; mixed-medley cherry tomatoes, $3.49 for 12 ounces; and organic rainbow chard, $1.99 per bunch. Amazon said these deals would be available to all shoppers, not just Amazon Prime members, who are offered additional savings on Whole Foods goods.
The retailing giant also said Amazon Prime members would see double the number of exclusive weekly deals, in addition to deeper discounts on fresh and prepared foods, as well as packaged goods.
Livingston says shoppers should be skeptical.
“If these are just normal, seasonal price reductions, they’re making it look like a bigger deal than it is,” Livingston says.
For instance, the grocer is lowering prices on organic asparagus ($2.99 per pound, a savings of $2) and organic strawberries ($2.99 per pound, a savings of $2), two foods that are are typically in surplus in the spring. It’s also discounting spiral-sliced ham ($3.99 per pound, a savings of at least 33 percent), an Easter staple.
Burt Flickinger III, managing director at Strategic Resource Group, a consulting company that specializes in retail and consumer products, and is based in New York, says his research into Whole Foods showed that the food retailer’s prices had turned off so many shoppers that it was unable to sell produce at the same rate as competitors. Whole Foods may be focusing on discounting fresh items now to improve turnover and reduce its own food waste, he says.
Consumers can certainly save by taking advantage of these new Whole Foods prices, but smart shoppers don’t buy everything there, he says.
“Probably a customer who only shops at Whole Foods could save, with these important price cuts, $500 to $1,000 a year,” Flickinger says. “But they’ll still pay from $1,500 to $2,000 a year more than shoppers who got the same products at competitors such as Costco, HEB, Kroger, Wegmans, or WinCo.”
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