Former Walmart President and CEO Bill Simon said on Wednesday (April 3) that he doesn’t think Amazon’s move to cut prices at Whole Foods will boost sales at the grocery store, according to a report by CNBC.
This would be the second round of price cuts for Whole Foods — the first was in November of 2017 when Amazon acquired the company. Simon said the lower prices illustrate that Amazon is working through the competitive realities of the grocery market, and that they’re an “indication that (Amazon’s strategy) hasn’t worked the way they expected it to.”
Amazon responded through a spokesperson and said, “That’s simply not true. Price reductions at Whole Foods Market have been successful and feedback from customers has been overwhelmingly positive — in fact customers have already saved hundreds of millions of dollars through lower prices and Prime member deals.”
Whole Foods still has a higher average price than other grocery stores, regardless of its discounts. According to an analysis by Morgan Stanley, a basket of groceries at Whole Foods will run around $198, while other grocers have an average of $172, and Kroger resides around $157, according to the report.
The price cuts will last at least through the end of the year, and they’ll include all kinds of products. Organic rainbow carrots, for example, will be reduced by $1 to $1.99, and Black Forest ham is going to be reduced $3 a pound, to $9.99.
Simon, who led Walmart from 2010 to 2014, said groceries are a very difficult market to delve into, especially with a focus on produce. He said Amazon would’ve been better off buying a Walgreens or Target if it wanted to make its physical footprint bigger.
Potential customers won’t go to Whole Foods because of the price cuts, he said, because people looking for lower prices don’t live near Whole Foods stores. When it began, he said, the store was selective about where it built locations.
However, Simon conceded that the move was good for Amazon because the company “got the lift they’re looking for from this price action, because it’s been covered in the press.”