Attention, Amazon Prime Members Who Shop at Whole Foods: You're in Luck
16 June 2018 - 11:29PM
Dow Jones News
By Heather Haddon and Laura Steven | Photographs by Melissa Lyttle for The Wall Street Journal
It's been a year since Amazon.com Inc. agreed to buy Whole Foods
for $13.5 billion. The biggest beneficiaries of the deal might be
Amazon Prime members.
Sky-blue signs advertising discounts for Prime members greet
shoppers in some Whole Foods parking lots. Inside the stores, blue
placards spotlight lower prices for Prime members on organic
nectarines and sausage.
"Blue signs mean special deals just for you. Yes, you," declared
leaflets that were arranged on a display table at a large Whole
Foods in Oakland, Calif.
Amazon last week expanded free two-hour delivery of Whole Foods
groceries for Prime subscribers to 14 cities, including Baltimore,
Boston, Philadelphia and Richmond, Va. More than half of Whole
Foods stores now offer a 10% discount on sale items to Prime
members.
Whole Foods' new delivery service has led some customers to
gripe. Some parking spots now are reserved for delivery drivers,
and store sections have been converted to busy order-assembly
areas. Some store entryways and service counters now are crowded
with workers picking up orders, customers said.
"It can almost feel like mayhem," said Julie Gelfat, a
57-year-old communications consultant who stopped going to her
local Whole Foods in San Diego after it added delivery. "There's no
protocol to make the in-store customer feel relaxed."
Amazon and Whole Foods spokeswomen declined to comment.
Amazon is also making a hard sales pitch to get Whole Foods
shoppers to sign up for Prime memberships.
"It was funny to be standing in a grocery store and hear, 'Would
you like to be a Prime member?' " said Talia Smith, 25 years old,
who lives in San Francisco. Ms. Smith said she is considering
paying the $119 annual fee for Prime perks, now that they include
lower Whole Foods prices.
Some analysts expect Amazon to use Whole Foods discounts as a
way to capture even more retail spending by the grocery chain's
largely urban clientele. Some 60% of Whole Foods shoppers are Prime
members, Morgan Stanley analysts estimate.
Ethan Weiss, a 49-year-old physician and scientist in San
Francisco, says he has switched most of his online grocery
purchases to Amazon's quick delivery offering at Whole Foods from
Instacart Inc. "It definitely felt like I got more for my money,"
he said.
Meanwhile, more Amazon products are turning up in Whole Foods
stores. At some locations, Echo speakers, Fire tablets and Fire TVs
are for sale alongside Amazon lockers where customers can pick up
their e-commerce orders.
Customers browsing Amazon's website now are likely to see Whole
Foods beans, baking soda and other store-brand goods displayed
prominently. Amazon also appears to be giving a boost to Whole
Foods' "365 Everyday Value" products. The chain's private-label
sales have grown as a percentage of store purchases since the deal,
according to advertising firm inMarket.
Sara Iyer, a 32-years-old podcast host from Los Angeles, said
the store-brand products have drawn her to Whole Foods more
regularly since Amazon took over. Her Amazon Prime credit card
gives her an additional 5% cash back on her Whole Foods
purchases.
The discounts appear to be driving stores traffic but the impact
on the Whole Foods bottom line has been mixed. Year-over-year sales
at Whole Foods stores are up an average of 3% since the takeover
closed in August, according to an analysis of anonymized credit and
debit card transactions by data firm Second Measure. But sales per
customer are down by an average of 1%.
Still, many shoppers still don't know Amazon owns Whole Foods,
according to a national survey by Field Agent, a data firm. Of 436
Whole Foods shoppers surveyed recently, 45% thought Amazon had made
the chain better. More than 75% of Prime members who shop at Whole
Foods said they intend to shop there more often, the survey
found.
Write to Heather Haddon at heather.haddon@wsj.com and Laura
Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
June 16, 2018 09:14 ET (13:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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