Before Amazon bought Whole Foods for $US13.7 billion
, the upscale grocery chain had a nickname: “Whole paycheck.”
The name referred to the company’s tendency to sell more high-end, niche items than traditional grocers — Whole Foods has carried things like kale-infused guacamole, $US80 jars of honey, and tofu-ginger-rice muffins.
But Whole Foods CEO John Mackey told Food Business News that reputation has started to disappear since the merger.
“One reason the merger came about is Whole Foods was in a trap, and I couldn’t quite figure how to get out of that trap,” he said. “The trap was ‘whole paycheck.'”
The fact that Amazon is known for its low prices, Mackey added, helped set Whole Foods free from that reputation.
Just a few days after the merger, prices dropped as much as 43% on a range of Whole Foods products. Organic Fuji apples went from $US3.49 a pound to $US1.99 a pound. Organic avocados were marked down to $US1.99 each from $US2.79. Almond milk dropped from $US3.99 to $US2.99.
According to Foursquare Labs, the research arm of Foursquare, price cuts in the first two days after the merger boosted customer traffic by an average of 25% over the week before.
“Amazon has a different narrative,” Mackey said. “Now we’ve embraced its narrative and so ‘whole paycheck’ disappeared. We escaped the trap. I feel a little bit like Houdini.”
Whole Foods has made several other changes since the acquisition. These include selling Amazon Echos, making Whole Foods products available on Amazon.com, and the decision to not allow local brand managers to pitch their products to store customers.
The lower prices are now in all 470 Whole Foods locations across the United States, and could have longterm effects on Americans’ perception of organic and healthy food. If organic produce remains at a lower price point and is more accessible for online orders, it may normalize organic food for a greater number of Americans — not just those who buy $US3 avocados.
Some local food producers worry that the acquisition could mean less locally sourced foods featured in stores, since individual locations won’t be able to decide to sell regional items starting next year. Instead, Whole Foods executives in the company’s Austin, Texas headquarters will decide on a higher percentage of the products stores sell.
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