Amazon is wasting no time bringing its reputation for undercutting competitors to the grocery business through newly acquired Whole Foods Market.
The company said it will begin slashing prices on a broad cross section of Whole Foods groceries Monday — the same day the $13.7 billion deal is set to close. That will start with items such as chicken, eggs, avocados and organic farmed salmon. Amazon reeled off a long list of other plans to combine its leading e-commerce and delivery assets with the physical locations of Whole Foods stores.
“This is a pretty impressive array of bold moves on the first day of an acquisition — unprecedented, we would say,” said Carol Levenson, an analyst at Gimme Credit.
The moves by Amazon inflame an already raging price war in U.S. groceries — a sector known for razor-thin profit margins. German discount grocers like Lidl and Aldi are expanding in the U.S. and Wal-Mart Stores Inc. has been investing in more discounts too. Low prices are familiar terrain for Amazon, which has operated with little profitability for more than a decade.
“They can afford to do this to create market share and traffic,” said Matt Sargent, senior vice president of retail at Frank N. Magid Associates. “That is terrifying for someone like Kroger.” Shares of grocery-store chains fell on the announcements, with Kroger Co. slumping 8 percent.
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