Whole Foods Price Cut Leads To 25% Surge In Customers, Channel Checks Reveal

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.

Comments

realmoney2015 NoDebt Mon, 09/11/2017 - 10:44 Permalink

Real food that are really all natural are more expensive than the stuff made in a lab unfortunately. But you wind up paying more in health expenses. It also hides the effects of inflation. The price of a load of bread in terms of the dollar has gone way up the past century. Buy compare it to non GMO all natural loaf and it's even worse. The problem of course is the federal reserve. Prices aren't getting higher, it's the dollar losing value. We need to go to a sound monetary system based on real money. https://m.facebook.com/scentsaverscandlesWe are running an educational campaign to help raise awareness to the evils of our current system and the value of real money, gold and silver. End the Fed!

In reply to by NoDebt

1033eruth ArthurDaley-Ol… Mon, 09/11/2017 - 17:33 Permalink

The media is attempting to brainwash the consumer into believing that Whole Paycheck is now affordable.  They even tried the propaganda scam of how they dropped prices 45% and you know how that works when they do that.   There is one rack of clothes that nobody wants and its marked down 45%  Everything else is only marked down 15 -25%.They aren't a price leader, they will never be a price leader no matter how much propaganda hits the media.  And NO.  Amazon is not taking over the grocery biz.  That theme is incredibly braindead.  When I winter in Phoenix there is one grocery store chain that is ALWAYS SLAMMED and its for good reason.  They are extremely competitive.  That would be Frys/City Market/ Krogers.  There is another huge chain that is almost vacant every time I walk in there and that is Safeway.  Why?  Price - Price - PRICE.In my whole life I've never bought anything at Starbucks or Whole Paycheck because of price.

In reply to by ArthurDaley-Ol…

JelloBeyonce Truther Mon, 09/11/2017 - 14:29 Permalink

So, is it better living in a country where the same feudal lords own the largest "competing" companies in every industry (take a look a the stock holdings of BlackRock, State Street, Vanguard, Capital World, Fidelity, etc.) and operate as a virtual cartel amongst each other, creating monopolies - controlling prices, wages, inventory, etc.?While I'm not pleased with Amazon trying to take over things either...at least they're lowering consumer prices, whereas the above are able to create pricing & wage collusion across their supposed "competing" companies. Coca-Cola & Pepsi are owned by the same largest money management firms.Lowes & Home Depot are owned by the same largest money management firms.Ditto for Microsoft & Apple & Google.Ditto for the six largest U.S. airlines.Ditto for the six largest national U.S. banks.Ditto for the largest defense contractors.Ditto for most every industry.

In reply to by Truther

JelloBeyonce Joe Trader Mon, 09/11/2017 - 14:55 Permalink

While that is true to some degree, not all organics are created equal.  The increasingly corportized organics industry is following in the same footsteps of traditional growing.  Integrity is being sacrificed for the sake of profit.  The indistry is starting the ignore the larger, macro ecosystem.  Truly healthy organic plants & produce rely on truly healthy organic soils.  Truly healthy organic soils contain more of the beneficial microbes (bacteria, fungi, enzymes, etc.) that help synthesize vitamins, minerals, natural antibiotics, free enzymes, flavonoids, and numerous other "micro-nutrients" in produce.Contemporary "organic" produce can be just as devoid of these nutrients as traditional produce....and is quickly becoming that way.  "Organics" is rapidly becoming more marketing gimmick than reality.     Healthy Soil ---> Healthy Plants ---> Healthy People ---> Healthy Planet.https://naturesoilproducts.wordpress.com/2017/06/05/the-numerous-benefi… The phrase "you are what you eat", applies across the board, to microorganisms, plants, animals, humans, etc.   

In reply to by Joe Trader

shimmy Mon, 09/11/2017 - 10:31 Permalink

Most of those cuts were to 'organic' products. They probably still made a ncie profit given the organic premium is absurd. Maybe more companies will take a hint and quit gouging so much on organic tagged products.

NoDebt shimmy Mon, 09/11/2017 - 10:45 Permalink

I know very little about what stamping something "organic" really means.  I know if I grow it in my garden it's "organic".  But what does that mean at a grocery store?Are we going to find out years from now that labeling things "organic" is about as meaningful as when the ratings agencies stamped crappy MBS products with Triple-AAA ratings before the GFC? 

In reply to by shimmy

El Vaquero NoDebt Mon, 09/11/2017 - 11:30 Permalink

"Organic" is a set of USDA rules that when followed, may or may not lead to higher quality food, but it costs you more to follow those rules if you are a certified farmer/rancher.  It's basically a bunch of rules about what pesticides you can use and whatnot.  A friend of mine lives on land that had previously been an organic farm, and he got the well for the farm (it was subdivided, and it was one big-ass well,) despite there being irrigation ditches.  It had to be on a well because they coudln't guarantee what pesticides/herbicides/etc... were in the ditch water. 

In reply to by NoDebt

NoWayJose Mon, 09/11/2017 - 10:55 Permalink

Sounds like 'normal' Amazon strategy - cut prices 43%, get 25% more traffic, lose money, gain market share, and wait until competition crumbles.

BitchesBetterR… Mon, 09/11/2017 - 11:01 Permalink

Imagine how all the suckers paying premium for the same food before amazon take over would feel like now with the new low prices?BTW - all that Amazon "slash in prices" begs the question: What is the real price for those goods in the first place? 

hound dog vigilante BitchesBetterR… Mon, 09/11/2017 - 12:01 Permalink

 retail grocery shelves get 35-75% margin over the producer/distributor cost. a few items are priced w/ -5%-5% margins to serve a loss leaders/traffic drivers.the real robbery is the 'margin' demanded by distributors (trucks & warehouses), who do less & less yet extort more & more... forget the retail charade... if amazon is able to break the distribution racket, then we might see some actual consumer benefit from this experiment.

In reply to by BitchesBetterR…

Agent P Mon, 09/11/2017 - 11:04 Permalink

"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."The coolness factor???  It's fucking groceries!!!(and still expensive relative to competitors)

Pasadena Phil Agent P Mon, 09/11/2017 - 11:13 Permalink

These are the same trendy aspirationals who pay $5+ for a cup of coffee at Starbucks. They aren't looking for bargains on quality merchandise. It's about being seen shopping at Whole Foods. This price cutting risks becoming "déclassé". Many of these people will "acquire a taste" to pay $50/lb for being seen buying horse shit.

In reply to by Agent P