BHS Insight

Amazon Buys Whole Foods

Andrew Botolino, Staff Writer

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Amazon is not satisfied with their domination of online shopping. Now, they have set sight on the food and grocery industry, purchasing Whole Foods, one of the leaders in organic and natural groceries, and on August 28, Whole Foods officially became an Amazon affiliate.

Amazon let it be known that they were competing amongst grocery stores for customers right away, drawing 25 percent more shopping traffic due largely in part to their drastic price reductions on numerous items. Organic fuji apples, avocados, and bananas were among the items that received price cuts of up to 43 percent, according to data from the mid-town Manhattan Whole Foods.

These price cuts were the main reason that Whole Foods received the recent burst in traffic, according to BHS Stock Club administrator and former Wall Street investor, Peter Tarnoff.

“The main reason myself and others don’t shop at Whole Foods is because of their pricing,” Tarnoff explained. By cutting prices, Whole Foods, known for their organic and natural foods, is possibly drawing in a demographic that otherwise would skip the trip and opt for a more affordable Stop and Shop or Shaws. In Hyannis, all three stores are within a half-mile of each other.

“Initially, I was surprised by the acquisition, because the continued strategy for Amazon has been to stay online, and away from the brick and mortar stores,” Tarnoff explained. “And I don’t think the food sector is one with great margins or areas of profitability.”

But regardless, Tarnoff believes that Amazon will shake things up and make the industry interesting, especially with their decision to implement grocery shopping on Amazon with pickup at your local Whole Foods.

BHS Senior Max Joakim said that, “I worked at Stop and Shop a few years back, and I know a customer might wait 20-30 minutes just to check out a handful of items. I think this new convenience will allow Amazon to attract new customers to Whole Foods.”

“It’s very similar to Peapod by Stop and Shop, and I know that didn’t work out too well for them,” Tarnoff stated. “But maybe with the younger demographic that uses Amazon, it could increase traffic.”

Nonetheless, Tarnoff is skeptical of the decision. “I think food is like clothing; it’s just something you want to buy at a store. Your canned, packaged or dry goods, sure, they can be bought online, but everything else? No.”

Senior Keely Fravel works at Whole Foods, and said that, “ Nothing has really changed for me.” Her bosses are the same, the CEO of Whole Foods still holds his position and with the change in seasons, the influx of new shoppers has been countered by the drop in tourist and summer resident shoppers.

So, Cape Cod’s Whole Foods can be seen as an outlier in the Amazon purchase. But that does not mean they are completely aloof from feeling any of its effects.

“I believe they cut prices to a single product in each department,” Fravel noted. In doing this, Amazon is utilizing a marketing strategy that gives the allure of price cuts across the board.

This may attribute to the slight change in the demographics of Whole Foods shoppers.

With the cuts, “a lot of different families are realizing that they can now shop here,” Fravel explains. In addition to more families, Whole Foods has seen some new younger shoppers.

Joakim explained that “[Whole Foods] is giving the customer another reason to shop there, as their items will no longer be as reaching in price as they once were.” He added, “even though I haven’t shopped at Whole Foods recently, I will shop their soon to experience the future store.”

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Amazon Buys Whole Foods