Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

August 28, 2017 | Food Fight: Amazon Slashes Prices at Whole Foods Up to 43% – Clear Winner?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

The Fed, struggling to incite inflation, is no doubt annoyed at Amazon today. Bloomberg reports Amazon Cuts Whole Foods Prices as Much as 43% on First Day.

Amazon.com Inc. spent its first day as the owner of a brick-and-mortar grocery chain cutting prices at Whole Foods Market as much as 43 percent.

At the store on East 57th Street in Manhattan, organic fuji apples were marked down to $1.99 a pound from $3.49 a pound; organic avocados went to $1.99 each from $2.79; organic rotisserie chicken fell to $9.99 each from $13.99, and the price of some bananas was slashed to 49 cents per pound from 79 cents. The marked-down items had orange signs reading “Whole Foods + Amazon.” The signs listed the old price, the new price and “More to come…”.

“Price was the largest barrier to Whole Foods’ customers,” said Mark Baum, a senior vice president at the Food Marketing Institute, an industry group. “Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest.”

Simon Salamon, 60, a regular Whole Foods shopper, said the price drop brought him to the East 57th Street store.

“It reminded me why I shop at Amazon,” he said. “Ninety-nine percent of the time they have the best prices and their return policy is great. With the prices lower, I think we’re more likely to shop here every day.”

“Goodbye, Whole Foods as we know it,” Karen Short, an analyst at Barclays Capital Inc. in New York, said in a note. “The conventional supermarket has not evolved much in decades. But Amazon will likely drive drastically different shopping behavior in grocery. The survival of the fittest has begun.”

Food Fight

A food fight has begun. Walmart, Kroger, Jewel, and Costco will respond with “new lower prices” of their own.

Someone is bound to come up with a price guarantee such as the following: “Always lower than Whole Foods”.

Clear Winner

The consumers is the clear winner in this food fight.

The Fed, clueless about what inflation really is, will not like this fight one bit. Please see Absurd Inflation Discussion by Fed Jackasses for further analysis.

Also consider “Oh That Elusive” Inflation!

Those seeking to mock Cleveland Fed creative nonsense may wish to consider: “Idiosyncratic and Transitory Factors” Holding Down Inflation: New Definition of Transitory.

Mike “Mish” Shedlock

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

August 28th, 2017

Posted In: Mish Talk

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.