Here’s what the Amazon-Whole Foods deal means for shoppers
Amazon.com Inc. won’t complete its acquisition of Whole Foods until Monday, but the Internet giant is already promising lower prices for consumers and more perks for Prime members.
Amazon, which is paying $13.7 billion for Whole Foods, said Thursday that shoppers will begin to see changes next week.
Amazon promised to begin discounting many of Whole Food’s best-selling staples such as organic avocados, almond butter, organic baby kale, and Whole Trade bananas.
Amazon also said it would soon begin installing lockers for Amazon delivery pickups at Whole Foods stores, and will integrate the Prime membership into the Whole Foods loyalty program, allowing members to get lower prices and other “in-store benefits.”
Shoppers will also soon be able to purchase Whole Foods’ store brand, 365 Everyday Value, online and through Amazon’s grocery delivery services.
"We're determined to make healthy and organic food affordable for everyone,” Jeff Wilke, chief executive of Amazon Worldwide Consumer, said in a statement.
Analysts said this is evidence that Amazon has decided to make a mass-market play in its continued push to compete against Walmart.
William Masters, an economist at the Tufts’ Friedman School of Nutrition Science and Policy, said that it was telling that the company chose to announce discounts for a mix of products, not just organic items. It signals a potential widening of the Whole Foods audience, he said.
“I wouldn’t be surprised if this democratizes access to existing locations,” he said.
The introduction of the 365 Everyday Value Brand to online shoppers is also a direct challenge to traditional packaged-goods manufacturers, Masters said, many of which have already been struggling with a loss in market share as shoppers increasingly opt for fresh groceries instead.
“This is potentially the emergence of a very powerful private label that signals value and signals quality,” he said, noting that the stock prices for both Kellogg’s and the Campbell Soup Company took a dip in the wake of the merger news.
Adam Salomone, a venture capitalist and cofounder of the Food Loft, a Boston food business incubator, said that Amazon also made explicit in its announcement that it intends to use the Whole Foods footprint of 460 stores as distribution centers for its varied delivery services.
The installation of Amazon lockers in Whole Foods stores will give shoppers even more reason to come into the store, he said.
And the retail stores could also become a distribution point, not only for grocery deliveries, but also for Whole Food’s prepared foods in an attempt to compete against startups like GrubHub and Foodler and encroach on other delivery attempts like UberEats.
“It’s part of an expansion of their delivery options,” said Salomone. “Imagine: It’s a Monday night and maybe you’ve done your grocery shopping. But if you can open up your Amazon app and order dinner from Whole Foods and maybe some toilet paper,” you’d be set. It’s similar to what they’ve done in book publishing and in media, starting as a distribution point and then integrating the entire supply chain into their services.
“I see this as really a customer acquisition strategy,” he said, with every new offering serving as another “entry point to the Amazon ecosystem.”
Customers shopping in the Whole Foods in Beacon Hill on Thursday said they were excited for the merger.
Manasi Parekh, 37, who moved to the Seaport District three weeks ago with her fiancee, said Whole Foods’ high prices typically deterred her from shopping there exclusively.
“We usually piece our groceries together from Peapod, CVS, Roche Brothers, and Whole Foods,” she said. “I’m a Prime customer so once [the merger] happens I’ll probably only shop here.”
But others wondered if the Whole Food experience would remain intact.
“The only thing I wish about Whole Foods is that the prices went down,” said Ally Frese, 26. “I just hope that the quality doesn’t go down with it.”
Meanwhile, rivals are scrambling to catch up with the e-commerce giant.
Walmart Stores Inc., which has the largest share of the US grocery market, is expanding its grocery delivery service with ride-hailing service Uber and said Wednesday that it will join forces with Google to let shoppers order goods by voice on Google devices.
Shares of other big grocery businesses fell.
The Kroger Co. dropped nearly 8 percent. Target, Costco, and Supervalu all fell about 4 percent. Walmart was off 2 percent.
Material from the Associated Press was used in this report. Natasha Mascarenhas of the Globe staff contributed to this report.