After acquiring Whole Foods in 2017, it appears Amazon is making the same moves the grocer would have made on its own to face increasing competition — only faster, a former Whole Foods board member recently told CNBC.
“What is Amazon doing that Whole Foods wasn't going to do?” said Ron Shaich, founder of Panera Bread. “They're doing the same thing — lowering the prices to compete, and they're bringing the technology to bear, but they have air cover.”
Shaich, who was on Whole Foods’ board when Amazon approached it, said the grocer was under pressure from activist investors to make a deal.
“The environment had changed,” he said. “You had Walmart and Target coming into organics. You had Aldi and Lidl coming in. There was going to be increasing price pressure. There needed to be significant investment in technology to adjust, and I think with activists at the door there wasn't the room quite frankly for them to take a long-term approach.”
Since the sale was finalized in August, Amazon has slashed prices and introduced some of its own products at Whole Foods stores. In August, for example, Amazon marked down some items by as much as 43 percent, though it only issued 1.2 percent price cuts on 114 products, according to a report at the time.
The price cuts come as Amazon tries to broaden Whole Foods' appeal and shed its “whole paycheck” image.
“We’re determined to make healthy and organic food affordable for everyone,” Jeff Wilke, CEO of Amazon worldwide consumer, has said. “Everybody should be able to eat Whole Foods Market quality. We will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.”
Amazon has also entered the grocery business on its own with the opening of its Amazon Go convenience store on Monday (Jan. 22) at its headquarters in Seattle, Washington.
Upon entering the Amazon Go store, customers are able to choose from pre-made salads, sandwiches, snacks and meals, as wells as beer, wine and other beverages, according to Recode reports. Shelves are also stocked with produce, meat and Amazon meal kits.