Editor’s Note: Whole Foods takes the low price approach
I got the email around noon on the first Wednesday of this month. It was from the folks at Whole Foods Market, informing me and likely millions of other consumers that it was lowering prices on produce at its stores around the country. It said the goal was something about getting what I love to eat for a little less money.
[caption id="attachment_606987" align="alignleft" width="155"] Seth Mendelson, editor in chief[/caption]
In the media that same day, articles and news segments discussed the fact that Whole Foods Market had just announced that it was cutting prices by 20% on more than 500 of its more popular products, which included the above-mentioned produce items. It was big news in retail, though it should be mentioned that after price checks, some media reports said that the chain’s prices significantly overall still are higher than most competitors. And, in the long run, I think, this will end up being much ado about nothing.
Even still, to me, it was another sign that Amazon.com, which purchased Whole Foods Market a few years ago for a nifty $14 billion or so, is mortal just like every other retail business across the country.
Amazon was right to make its foray into traditional supermarket retailing. It is one of the few retail categories where consumers still need to get off their couches and go to the store to get the best selection of the freshest foods, as well as many nonfood products, for that evening’s dinner. Digital, lower price points and same-day shipping upset the retail apple cart a lot, but nothing can be done to alleviate the need to squeeze the melons, smell the meats and check the cans that a visit to the local food store offers.
In other words, if you can’t beat the likes of Walmart, Target, Kroger and Albertsons — not to mention such regional powerhouses as Wegmans and H-E-B — you might as well join them.
But this was not the usual journey for Amazon. No, the digital retail company was moving outside of its sweet spot and it quickly hit a couple of bumps in the road. Most noticeably, Amazon is known for three things — price, assortment and convenience — and, at the time, Whole Foods Market was known more for high prices and good quality. Often, those things just don’t jive.
Something had to give and, not surprisingly, it was the pricing structure at Whole Foods Market. For a company so in tune with building traffic as Amazon, the company’s top officials quickly have figured out that Whole Foods Market’s out-of-whack prices were not bringing more people into its stores for the quality merchandise it stocked.
Also, they know that Whole Foods Market is locked in a brutal battle with some of the nation’s largest retailers — specifically Walmart — to control the pricing perception on food items across the country. The eventual winners — and there will be eventual winners, despite the pain the industry is going through — will be the retailers that can offer consumers the perceived best value, along with the best quality in a reasonably convenient fashion.
If nothing else, Amazon just took another well publicized step to gain on the competition in this never-ending struggle to win the war for the consumer’s attention and acceptance. Don’t be shocked when traditional retailers fire back with their own salvos. While consumers ultimately could be the big winners here, I fear that only the most nimble retailers will be able to adjust to the changing times.