In their latest push to reinvigorate the growth of its lynchpin Amazon Prime service, Jeff Bezos & Co. are offering members even greater discounts at Amazon's Whole Foods Stores.
Whole Foods will now offer Prime customers another 10% discount on top of the price reductions that have already been announced since Amazon took control of the company.
After a 20% price hike earlier this year, Amazon is facing more pressure to appease its prime membership as analysts worry about slowing growth. The company apparently believes Whole Foods will be an integral part of that strategy, even though its stores only represent a tiny fraction of American grocery stores.
As we pointed out yesterday, with gas prices nearing $3 a gallon sopping up more of consumers' cash, WFM is launching its latest strike against its rivals at a particularly vulnerable time.
Here's the Wall Street Journal:
The online retail giant said it would knock 10% off already discounted items and each week cut prices on other products throughout the store. This week’s deals, for example, include half off wild-caught halibut, buy-one, get-one free 12-pack case of sparkling water and $2.99 for a pound of organic strawberries.
The new deals are available immediately at Florida stores and will be rolling out to its more than 460 stores nationwide this summer. Cem Sibay, vice president of Amazon Prime, said the 10% discount will apply to hundreds or even thousands of already discounted items in each store, while the weekly rotation of deals will typically number in the single digits.
"It’ll be a good mix of produce, meats and seafood," he said.
After revealing that its Prime service has more than 100 million members world-wide, Amazon is worried that it has largely reached its peak adoption among wealthy American households, and that Jeff Bezos might fall short in his quest to become the first trillionaire.
But since the program was introduced in 2005, Bezos has been adding ever more ambitious features. For example, Amazon recently added in-car delivery for Prime members and a Prime Book Box that offers a curated subscription of children’s books at a discount. In some markets, it's even offering one- and two-hour delivery. Unwilling to rely exclusively on wealthy Americans, Amazon recently introduced a $5.99 a month service for families who rely on government benefits.
But as Reuters points out, the new Whole Foods loyalty program might take some convincing. That's because, even after several rounds of price cuts, WFM hasn't been able to shake its "Whole Paycheck" image.
Still, Philadelphia-area Whole Foods shopper and Prime member Heather Kincade, 46, is going to need convincing.
While Whole Foods’ prices on staples like rotisserie chicken, bananas and avocados have come down, she still thinks some every day items are prohibitively expensive. "If I start buying dish soap and other things there, I will have hit the big time," she said.
Though if the cuts make all products at Whole Foods cheaper than its competitors, Prime members might become interested.
Either way, by persistently slashing prices, WFM is pressuring its much larger rivals to consider following suit even as rising fuel costs are contributing to higher expenses.
But while Whole Foods can withstand a prolonged period of losses thanks to Amazon's backing, the small grocery stores that still comprise a large chunk of the American market cannot.