Amazon's Whole Foods Price Cuts Brought 25% Jump in Shoppers
bloomberg.com
bloomberg.com
Announcing a price cut seems way more likely to draw in comparison shoppers to see what cuts were made, and if they compare to people's current regular supermarkets.
Say Coca-Cola buys McDonald's Corporation and it makes a splash in the business community and restaurant blogs. Then the new joint company announces that all soft drinks are $0.10 from now on.
Traffic spikes 25%. Which of those two events was the cause?
A better analogy might be if Coca-Cola found a way to magically drop the calorie total of McDonald's food without altering the taste.
Having seen some of the price cuts online it doesn't seem like a whole lot, but if the staples like eggs and veggies/fruit are actually coming down ($3 peaches, $5 eggplants from what I remember) and I can get a week's worth of not-pasta food for under $150 I'd probably switch over.
Seems quite evironmentally unfriendly to subside out of season food solely to appease picky customers.
Eating local in-season food should be promoted by market mechanisms.
If a supermarket had an "in season" section I would shop there almost exclusively, if it meant I was going to to get a good deal and better produce. Even with farmers markets you're not guaranteed to get in season local produce.
Given that the market is at work, that is obviously not the result. Transport costs do not apparently override convenience, simpler logistics, and economies of scale.
People rave about cheap meat, eggs, and diary products. But anyone that has actually been involved in producing it, knows that the price you see today is not sustainable unless you only optimize for quantity, and the expense of everything else.
A typical deal might look like:
Buy 1k units for $0.20 each with an option to buy 200 additional units for $0.40 each.
If sales are above 1200 units, the shop likley can't get hold of any at any price.
Great way to draw in the crowds without actually losing all that much from the price cuts.
I went to Whole Foods the week before the announcement and then again today. I was very sensitive to pricing on the first visit (and, frankly, was pretty surprised at how expensive most things were). On the second visit today, I noticed big drops in the prices of certain items, such as fish, produce, and yogurt.
For instance, I don't think there was any fish cheaper than $15/pound before the takeover, yet today Cobo Salmon behind the counter was $10/pound (sale) and shrimp was $12/pound (regular price).
It was also possible to buy organic Gala apples for $1.50/pound (sale) and cauliflower at $2.50/head (normal price).
It's not as cheap as the "normal" supermarkets in the area, but it's more competitive than before. Of course, these could be seasonal variations -- for instance, apples are in season in New England right now.
Edit: I'm mostly referring to the frozen seafood. Fresh is too expensive for my wallet.
I don't get all this business about Whole Foods being expensive. I went to Costco, Safeway, and Whole Foods this past Sunday. Per usual, the packaged, vacuumed-sealed ground beef was <= the cost elsewhere; $4.99 at WH, $7.99 at Costco, and $6.99 at Safeway. The chicken wasn't on sale today at WF; it was $2.99/lb for a whole fryer that they'll chop up, though often it'll sell for $1.99/lb. But Costco's $1.99/lb packages were sold out, and Safeway is rarely less than $2.99 either. (WF did have organic whole fryers on sale for $2.29/lb, but pre-packaged so they won't chop them up.) I forgot the exact price because I didn't buy any, but the steaks at WF were no more (and perhaps less) than the Costco steaks. You can buy cheaper steaks at Safeway, but they're not worth the money.
Generally, for staples (meat, vegetables, canned goods) I've found Whole Foods to be no more expensive, and often cheaper, than elsewhere, unless I'm buying in bulk at Costco (e.g. a case of canned beans). Whole Foods can do this precisely because people blindly buy their premium products, like prepared foods. Whole Foods sells a huge volume of high-margin items. By contrast, regular grocers make their profit from low-margin staples. Thus, for staples Whole Foods will always be competitive. Moreover, because Whole Foods is upmarket their staples (especially vegetables and meats) are often of better quality if only so they don't detract from the overall feel of the store, and in any event they move quicker off their shelves and are thus often more fresh. Compare the butcher counter at WF to your regular grocer, assuming the regular grocer even has one. I can often get freshly butchered, hormone-free chicken for $1.99/lb (never more than $2.99/lb) at WF; at Safeway the only way to get that price is pre-packaged Perdue chickens.
Don't get me wrong--I've walked out of Whole Foods having paid plenty. But it's knowingly and by choice. And there are plenty of times where I've walked out of Safeway thinking, "WTF!?".
I'm not looking forward to Amazon's cost-cutting measures. If Whole Foods moves down market it means the premium shoppers will go elsewhere and stop subsidizing my purchases. Amazon can subsidize the prices, but I suspect quality and selection of staples will go down.
When you say "do well", you mean they're not going to generate enough revenue? Because big apples generally lose quality faster in long-term storage, according to a book I inherited on how to run an orchard, from 1948. :)
Anecdotally, I find that oversize apples are typically less dense.
All I know for sure is that they tasted fresh--dense, crisp, and juicy--and didn't seem to be covered in much, if any, wax. The price partly seemed to reflect an abundance given that we're in apple picking season; and partly reflect their relatively small size, even for galas, and odd coloring--strangely yellowish (I checked the stickers and the labels twice).
Other Amazon acquisitions such as IMDB, Goodreads and Audible seem to be humming along. Kiva, now Amazon Robots, is crushing it. (Little joke there.)
I can't really imagine Amazon wanting to get into the brick and mortar business, especially in Grocery stores.
I used to shop at Whole Foods regularly back when they were Fresh Fields in the mid to late 90s. Now I find them just too expensive. Maybe it's just me, because back then, I was feeding a couple of toddlers and now I'm feeding several large eating machines.
Canned beans were already pretty competitive, don't think any dried ones changed. No change on onions, leeks, beets, pork, or bread that I noticed. Tilapia went down by a couple bucks a pound.
But 50% of stuff I still get from Costco or Trader Joe's (that requires a forty minute drive).
I've never seen a gallon go for above 2.99(if that) at safeway and never seen one below 3.99(if you're lucky) at whole foods
I've found milk and eggs to be sometimes slightly cheaper at Safeway, but they're really bottom-of-the-barrel brands and not something I'd buy anyhow. The brand of non-organic eggs I buy is sold by both WF and Safeway, but WF is consistently <= than Safeway, and there's only one or two brands at Safeway that is cheaper.
But this is pocket change. For higher-priced things, like meats (ground beef, chicken), I find WF's prices to more than make up the difference. Generally, unless Grocery Outlet has a great deal, we just default to buying meat, eggs, dairy, and vegetables at WF when we can. Unfortunately, WF is less convenient for us than Safeway, so we do regularly shop (and pay more for it) at Safeway if we're pressed for time.
From one milk lover to another, what's your favorite and additionally best value brand for milk? I haven't recorded my preferences but seem to remember disliking Trader Joe's and being plenty surprised by a value brand or two.
Amazon's inability or indifference to combatting counterfeit sellers on their website has completely eroded my trust in eating the food they source.
My observations are 1) my local mom and pop store carries the freshest and cheapest vegetable produce. They are alert to my needs and are doing brisk business with a regular clientele. They source their produce from the central valley ave Sacramento area using a network of independent farms. 2) Costco is great for some produce while making up the true per pound cost for other items e.g. Tomatoes. Additionally I find Costco produce to perish faster. 3) whole foods has dependable produce but at over 50% Mark ups.
My money is on Amazon doing what they have always done: compete with wide selections and the cheapest pricing possible while using Whole Foods to bring their Fresh delivery service to far more markets at a higher efficiency.
I would have done this with Peapod etc but their website was lacking in 1) choices (Amazon will get you pretty much any food item) and 2) delivery window and 3) unattended delivery
Actually Amazon isn't always the lowest price or the best selection; their #1 aim is to try to be the most convenient (where cost is an important, but not exclusive, factor in "convenience"). In fact they differentiate prices to different consumers and ramp up prices in some popular items when they think they can increase margin. (Not that there's anything necessarily nefarious about that). They do try to make it hard to compare prices, which other retailers do as well.
> [n]or goal with the Whole Foods purchase.
We don't know Amazon's goal with the purchase. There can be several, possibly even competing ones (launch a couple, see what fly). For example they have Echo in the store: it can be just a way to switch people to online ordering and/or a way to see if people buy non-food products through this real estate they already purchased (this is how Fry's transitioned from a grocery store to an electronics store in California) and/or a way to link in-shop shoppers to their online history and/or something we don't even know about -- or they haven't thought of yet.
If Google/Msft were not entering the cloud market, you'll never see as much an aggressive price cut from AWS, and Amazon should be having a way bigger a market cap right now.
Even if you have money, shopping at Whole Foods is foolish. Amazon reduced a fraction of the items prices, they are still heavily over-priced, and the food quality for the price is low. Whole Foods is a grocery store that prices it's food high to attract a certain type of consumer. That's all.
If you want high quality food, I encourage you to visit a local farmer's market. There is probably one close to you every week, or every other week. There are even larger ones or speciality ones less frequently (monthly).
At a farmer's market you'll get high quality produce, fresh that is directly from the farm. All or most of your money will be going to people actually growing or making the food, not a large corporation, food distributor, or Amazon.
I really wish we would just ban grocery stores for good and try to go back to this form of food consumerism.
I'm sure that'll work out great for people who live in poor communities: https://en.wikipedia.org/wiki/Food_desert
You seem to be reductive.
people need affordable supermarkets. this isn't complicated, it's unfortunately just not very profitable to serve these people.
Really, truly what I'm saying is true. For people who don't even have a grocery store, I think things like community gardens (a garden that is shared between a block of neighbors) is a perfectly scalable, healthy and affordable solution.
That's largely bunk - the definition of a 'food desert' is far from what the media would have you believe:
"In the U.S., a food desert consists of a low income census tract residing at least 0.5 miles in urban areas ... from the large grocery store."
Living 0.6 miles from a grocery store != not having a grocery store....
Traveling over a mile to a grocery store is a big deal for somebody without a car -- especially if they're elderly, disabled, or have children.
1. http://americannutritionassociation.org/newsletter/usda-defi...
As someone who lives in a big city, grocery stores here are packed at all hours. There will be dozens of checkout lines open going through customers as fast as they can. There are a ton of grocery stores, too, with each one as busy.
Farmer's markets are clearly not as effecient at serving customers as a supermarket, which means they would be even more crowded. We would have to have a LOT more of them to replace all of the supermarkets, and they would take up a lot more space than the current supermarkets to serve the same number of people.
As a busy parent of a toddler, grocery shopping already takes up a lot more time than I want it to. I can't imagine trying to fit the extra time it would take to shop at a farmers market for everything into my schedule.
When we think about making some sort of massive change to the way we live our lives (like everyone doing all shopping at farmer's markets), we have to really think about what it would mean to operate at that scale. What might work great for you as an individual may not work for everyone in the world, if everyone were to change their behavior.
Unless you're buying industrial quantities of food, I doubt a trip to the farmer's market will save you $40. The quality difference is also difficult to quantify. Onions and potatoes from the farmer's market aren't any healthier then onions from the supermarket.
And here's the elephant in the room - at any particular time of year, most of the food that you eat is not in season where you live. If it's not in season, you're not going to get it from your farmer's market (Unless said farmer is reselling it from a wholesaler - which a lot of stalls do.)
Do you spend an hour a week churning butter by hand, or do you pay someone else to do it for you?
By that kind of reasoning, how much money can you save by reducing how much time you sleep by an hour each night?
Or maybe if I add 10 people to your project you'll get it done 10x faster?
After a point, I will absolutely pay $30 to not lose another hour of sleep.
Either way, you're missing the point. Time is money. People spend money to save time, and people spend time to save money. Different people have a different rate at which they'll strongly consider doing one over the other.
For most of us, the amount of money we have is very limited. For all of us, the amount of time we have is very limited. Eventually, we'll all be dead.
Esitmating 1 hour a week, and an average salary of $50, that's an extra $25 per week, or $1300 a year!
Tech analogy: Apple's stuff truly is much more expensive than most other stuff, but not so expensive that it's completely out of reach for upper to middle class incomes.
1. It's a hard life for farmers. To be open for business by 8:30 a.m. for our local gentry, it's necessary to rise at 4 a.m., load up the truck and drive for a couple hours to our town. Some of the smaller-stand operators are on the verge of quitting because the commitment doesn't pay off.
2. Part of shoppers money goes for the farmers' gasoline, travel burden, etc. That's much more intense when food is brought to market inefficiently in many smaller vehicles rather than a single, Interstate-grade truck.
3. Most farmers are trying to move produce at multiple stages of goodness. Yes, there are beautiful peaches at $3.99/pound. There also are squished ones in the mix at times, too, as well as over-ripe ones at $1/pound that the farmers need to sell, too. It's all part of running a store. But someone still has to pick out the good from the not-so-good, and often that's the customer.
Overall, I'm glad farmers' markets exist, and sometimes the goods can be spectacular. But the inefficiencies are too severe for them to take on a dominant role in feeding the USA.
I also do not get the "shop at a farmers market exclusively" line of reasoning. We don't have access to farmer's markets in the winter. That's not really a highly available thing where I live (Michigan). Even when it's summer we still do not have access to all the same foods that are available in a grocery store.
Because everyone here seems to only understand the world through software engineer terms, I'll break it down for you: a distributed system is often very efficient and scalable solution to a supply and demand problem.