Curious what the impact was of those dramatic price cuts by Amazon at Whole Foods two weeks ago? We now have the answer.
As a reminder, at the end of August, just as the Amazon purchase of Whole Foods closed, Jeff Bezos slashed prices at his newest retail acquisition by up to 43%. As Bloomberg calculated then, some of the more prominent examples were as follows:
- organic fuji apples were marked down to $1.99 a pound from $3.49 a pound;
- organic avocados went to $1.99 each from $2.79;
- organic rotisserie chicken fell to $9.99 each from $13.99;
- banana prices were slashed to 49 cents per pound from 79 cents.
And while such splashy price cuts almost certainly resulted in negative margins and a loss on most sales, it also led to a burst in publicity and hype as every single media outlet covered the dramatic price cut which sent the grocery store index tumbling over concerns what Amazon's aggressive pricing tactics would mean for competitors. Just think of its as marketing - and market-capture-ing - spend.
But how impactful was it?
Well, according to just announced channel checks courtesy of Bloomberg, the grocer saw a traffic bump of 25% nationally in the first two days after the Amazon takeover, compared with the same period a week earlier, according to data from Foursquare Labs, Inc. At stores in Chicago, the customer surge was even higher: 35%.
Now the question is whether this surge in tarffic will last, or if once the initial coolness factor wears off, customers will revert back to their old spending ways. For now, the retail sector is not impressed and even as stocks are soaring to new all-time highs, the XRT appears to have found a sudden air pocket following the report.