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Businesses The Almighty Buck

Amazon Plans Cuts to Shed Whole Foods' Pricey Image (bloomberg.com) 311

When Amazon completes its acquisition of Whole Foods Market, Chief Executive Officer Jeff Bezos will try to keep the grocer's reputation for premium fresh foods while cutting prices to shed its "Whole Paycheck" image. From a report: Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with Wal-Mart Stores and other big-box retailers, according to a person with knowledge of the company's grocery plans. That included potentially using technology to eliminate cashiers. Amazon, known for its competitive prices, is trying to attract more low- and middle-income shoppers with its grocery push. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot program to deliver groceries to food-stamp recipients.
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Amazon Plans Cuts to Shed Whole Foods' Pricey Image

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  • by obenchainr ( 817684 ) on Monday June 19, 2017 @09:47AM (#54647365)
    I would venture that a big percentage of WF clientele shop there *because* of its high-price reputation. There are studies showing that people feel like they're getting a better quality product when they pay more for something, and that is almost certainly a big part of why people shop at WF. I suspect that trying to compete with Walmart is going to destroy the chain.
    • by Hognoxious ( 631665 ) on Monday June 19, 2017 @10:04AM (#54647507) Homepage Journal

      There's a TV show in Britain called [slashdot.org]http://www.bbc.co.uk/food/prog... [bbc.co.uk] . They take a family and swap some of their expensive brands for generic articles (and disguise the packaging so they can't see). A lot of the time they actually prefer the cheaper stuff, at least when they don't know about it.

      • There's a TV show in Britain called [slashdot.org] http://www.bbc.co.uk/food/prog... [bbc.co.uk] . They take a family and swap some of their expensive brands for generic articles (and disguise the packaging so they can't see). A lot of the time they actually prefer the cheaper stuff, at least when they don't know about it.

        and that is why marketeers invented branding.

      • by tbannist ( 230135 ) on Monday June 19, 2017 @10:47AM (#54647869)

        The cheaper stuff is often made with inferior quality ingredients and then loaded with more salt, sugar and fat to "improve" the taste. It can be tastier and less healthy for you. Taste and price are not the only criteria to consider when picking what to eat. For example, when reading the label on a store brand pack of chicken fingers, I found they contained 34g of sugar per serving, which was more than the ice cream desert in the next freezer.

        From a quick glance at the show you linked, it looks like your summary of the show might be lacking, though, it's called "Eat well for less" and it may have a focus on finding good, inexpensive, and healthy food.

        • by spoot ( 104183 )

          OK true story here, from just last week.

          Here in Austin, we have a Whole Food's competitor run by HEB called Central Market. It's closer to my homestead, so I go there if I need something that a "Whole Foods" store would carry. I also shop at Trader Joe's Randal's and at Fiesta and other "Mexican" grocery stores (depending on price and my needs at the time).

          Ok, so I was a Central Market the other day and I passed a couple looking at bacon. I had recently bought the best damn bacon I ever ate at Central Marke

      • by AmiMoJo ( 196126 )

        My car is like that. It's not exactly that he prefers the taste of the cheaper stuff, he just likes variety. If he hasn't eaten it for six months he will always go for it.

    • by hey! ( 33014 )

      Yes, the effect you are talking about is real. But it's not the whole story. I think Whole Foods makes a lot of its money off of what I think of as the "Inverse-Cheese Shop Sketch" method.

      Say you're just dashing in for a dozen eggs; you walk past the enormous cheese display and think to yourself, "That's a lot of cheese. I like cheese, but that's not what I'm here for." That's because while choice draws attention, too much choice actually dissuades people from buying. But just as you're thinking "chees

    • There are studies showing that people feel like they're getting a better quality product when they pay more for something,

      That's why personal hygiene products (and clothes, and other gender-specific items) for women sometimes cost three times as much as they do for men.

      Your average man looks at a stick of deodorant "A" and deodorant "B" and sees that "A" costs 20% less than "B" so he buys "A".

      Your average woman looks at the female versions of "A" and "B" (which might be identical except for scent) and buys "B" because she assumes the higher price means a higher quality product.

      Studies have shown when women's hygiene products

  • Allow local sellers (Score:3, Interesting)

    by Anonymous Coward on Monday June 19, 2017 @09:50AM (#54647383)

    just like on amazon.com, amazon should now allow local sellers to come and sell at Whole Foods stores! this may lead to competitive pricing and benefit whole food's reputation & business, farmers and consumers alike.

  • Oh (Score:5, Interesting)

    by thevirtualcat ( 1071504 ) on Monday June 19, 2017 @09:52AM (#54647395)

    They want to turn Whole Foods into Wegmans?

    I'm... actually okay with that.

    Carry on.

    • by enjar ( 249223 )
      We I live they are building a Whole Foods and we already have a Wegman's. We shop at Wegman's because, well, it's Wegman's and Wegman's is awesome. I'm happy they are building the Whole Foods, though, since it should help property values go up although I never plan on setting foot in it and will keep shopping at Wegman's. Also, my spouse is from western NY so shopping at somewhere other than Wegman's requires a damned good excuse!
      • The excuse for me is "Wegmans is not open right now." The follow-up question is "Why are you going grocery shopping between 12AM and 6AM?"

  • by crow ( 16139 ) on Monday June 19, 2017 @09:53AM (#54647413) Homepage Journal

    I expect the first thing Amazon will change is the back-end distribution system. This is something Amazon knows better than pretty much anyone else, especially for non-perishables, which is probably more than half the store.

    • by houghi ( 78078 )

      I expect them to cut people and wages. I also expect them to cut hours of people who work there, so the people who work there now will need foodstamps.

      Perhaps the thing that Amazon is trying to do is getting the foodstamps from their employees, They see them getting all that free monies and they want that.

      • by bill_mcgonigle ( 4333 ) * on Monday June 19, 2017 @10:18AM (#54647629) Homepage Journal

        Perhaps the thing that Amazon is trying to do is getting the foodstamps from their employees, They see them getting all that free monies and they want that.

        For their employees. Many times when people get a job at Walmart they are given food stamp and welfare forms during orientation.

        These programs are a direct subsidy to these corporations, so they do not have to pay their employees a living wage.

  • To "No Paycheck" for many employees.
  • Eliminate cashiers (Score:3, Insightful)

    by Dracos ( 107777 ) on Monday June 19, 2017 @09:56AM (#54647439)

    No. When I go to a physical establishment, I expect that experience to include one interaction with an employee. Self-checkout is the wrong solution to a problem retailers created: not having enough checkouts open. If you want me to do use self-checkout, thereby doing an employee's job, I want an employee discount. Stop pushing this on customers as if it's some miraculous reverse-ATM.

    • Re: (Score:3, Insightful)

      OTOH, I avoid establishments that don't have self checkout. Even if there is no line at the checkout, I will always use the self-check because I can scan and bag my groceries faster than the register jockey. I don't go grocery shopping for the "social experience". My goal when grocery shopping is to exchange symbolic currency units for tangible goods as efficiently as possible, not to make small talk about the sports or the weather or comment on my food choices or donate a dollar to charity.
      • OTOH, I avoid establishments that don't have self checkout. Even if there is no line at the checkout, I will always use the self-check because I can scan and bag my groceries faster than the register jockey. I don't go grocery shopping for the "social experience". My goal when grocery shopping is to exchange symbolic currency units for tangible goods as efficiently as possible, not to make small talk about the sports or the weather or comment on my food choices or donate a dollar to charity.

        Sam's Club has taken it a step further; you simply scan items as you put them in the cart and when you are done you pay electronically and avoid the line completely. Upon leaving that scan a barcode on your phone, check the items listed and out you go. In most cases they don't even bother to do a thorough check after the first few items. If I ran security there I'd have them just look for big ticket items to ensure tehy aren't walking so as to make the whole experience as painless as possible.

    • by MagicM ( 85041 ) on Monday June 19, 2017 @10:23AM (#54647671)

      When you spend 8 hours bagging other people's groceries you can get an employee discount.

      When you spend 3 minutes bagging your own groceries you can get the enjoyment of faster check-out.

      • You don't bag your groceries yourselves in the US? That's a very foreign concept to my German mind.
        • No, we don't bag our own groceries here in the US. It seems from my travels that this is a unique US thing.
          Here, either the cashier bags the groceries as she scans them, or a second person (usually a teenager) bags them as the cashier sends them down the counter.
          I think this might be influenced by the fact that Americans are usually buying huge amounts of food on each trip. Most of us make one grocery trip for our large families every week or two. And of course, we over-eat a lot. We tend to wheel a large s

    • by djinn6 ( 1868030 )

      When I go to a physical establishment, I expect that experience to include one interaction with an employee.

      Personally I would prefer that interaction to be me asking "where is X" and them pointing it out to me, rather than the one where I watch them scan my items. The most expensive part of grocery shopping is not the food itself, nor the gas to get there, but my time. If self-checkout can save me 5 minutes, it's already a discount.

    • Self-checkout is the wrong solution to an important problem. The cart should be intelligent and know what you've put in it such that it's performing all of the checkout as you go along so that when you leave it already knows what you owe and can automatically make the transaction. At most you need someone who can make a quick spot check for people on the way out, but if you're going to put cameras in stores you can have people doing loss prevention remotely and just tip off the gatekeeper if they need to st
  • by blahbooboo ( 839709 ) on Monday June 19, 2017 @09:57AM (#54647453)

    The article is click bait. As stated in the article, Amazon has not confirmed ANY of the assertions made in the article.

    • Thanks. It sounded like Fresh and Easy all over again, which had to have been the dumbest grocery venture in decades. (Not only was it wired, but they tried to compete head-to-head with Trader Joe's with many stores less than a quarter mile apart!)
  • People that shop at Whole Foods are not price conscious, it is premium retailer aimed at well-off crowd. This group doesn't intersect with WallMart shoppers, so why then would you want to compete with WallMart on price?
    • This group doesn't intersect with WallMart shoppers, so why then would you want to compete with WallMart on price?

      Because if Walmart offers good enough organic produce, price will win out. There seemingly are not enough Whole Foods customers who aren't willing to go elsewhere for their organic kale to keep the company afloat when they can get it from Costco or Kroger or yes even Walmart. Whole Foods had a niche when they were effectively the only ones selling organic foods. Now I can get that from nearly anywhere, often for a lot less money.

      • This group doesn't intersect with WallMart shoppers, so why then would you want to compete with WallMart on price?

        Because if Walmart offers good enough organic produce, price will win out. There seemingly are not enough Whole Foods customers who aren't willing to go elsewhere for their organic kale to keep the company afloat when they can get it from Costco or Kroger or yes even Walmart. Whole Foods had a niche when they were effectively the only ones selling organic foods. Now I can get that from nearly anywhere, often for a lot less money.

        WalMart tends to buy at the low end of the quality spectrum, mainly to keep prices down; at least that was the case a few years back when I talked to one of their suppliers who sold to most other grocery chains as well. There is nothing wrong with their food, just a lot of it is a cut below a major grocery chain's quality; that lets them keep prices low. The only exception I've seen is the vegetables which tend to be perfectly fine; the meats and fish OTOH are often barely edible in comparison.

        • WalMart tends to buy at the low end of the quality spectrum, mainly to keep prices down; at least that was the case a few years back when I talked to one of their suppliers who sold to most other grocery chains as well. There is nothing wrong with their food, just a lot of it is a cut below a major grocery chain's quality; that lets them keep prices low. The only exception I've seen is the vegetables which tend to be perfectly fine; the meats and fish OTOH are often barely edible in comparison.

          I don't disagree but remember that Walmart doesn't have to capture all of Whole Foods customers to drive them out of business. They just need to get enough to push them into unprofitability like they've done with so many other retailers. The problem Whole Foods is facing is simply increased competition and they don't have the cost structure right now to deal with the threat adequately. Most people simply aren't that loyal to Whole Foods especially since they no longer have a niche all to themselves.

    • Now that "organic" has gone mainstream and available everywhere, the image of Whole Foods as a retailer for the "not price conscious" is exactly the image they are trying to shed
  • ...and the supermarket business just shit themselves.

    So which will blink first:
    - will the giant megacorp which seems to run magically profit-free manage to outcompete everyone in an industry where margins are already nearly zero?
    - or will the high-capital, high-labor, complex grocery business finally be the anchor that drags amazon to a stop? Certainly Amazon's approach has revolutionized the sale of general consumer products but entering the world of products whose value ticks away (quickly) with the cloc

  • For the death of the middle class. Hear me out on this one. As Whole Foods and other over priced chains are a good indicator of a shrinking middle class. Middle Class people want to feel upscale and are willing to pay for it. They don't make enough money to source their own food stuffs like a billionaire or even a multi millionaire might, but they make enough to eat Organic (which is a fancy way of saying no pesticides in your food and no BHT in your packaging).

    As these ever so slightly upscale places g
    • Its still funny that that myth persists, the whole no pesticides in organic food. Its just flat out wrong. All farmers use pesticides, organic or not

    • You've got it all wrong. Upscale groceries aren't going "tits up", its just Whole Foods that is struggling because there's more competition in the upscale market than ever before. Since Whole Foods established a demand for natural/organic foods, there are now dozens grocers that are as good or better than Whole Foods, but with more competitive prices.
  • Why didn't Amazon buy Kroger? They have much larger market penetration. Amazon is sitting nearly unlimited cash. Whole Foods is a place where upper-middle-class people can waste their money on goods that may, or may not, be worth the cost. I watched South Park and I have shopped at Wholefoods. They portrayed Wholefoods exactly as it is. Overpriced, agenda driven and snooty.

    • Probably because Whole Foods large enough to give Amazon a grocery chain to have nationwide coverage, but small enough that they can write off the acquisition is their experiment doesn't work out. Amazon bought Whole Foods for just 27% more than its previous closing price, which is a bargain as far as corporate acquisition's go. Kroger, on the other hand, has seven times as many store and ten times the revenue; even Amazon couldn't buy them without risking the whole company.
  • Posh people won't like it ;-)

  • If this story is accurate, then they'll be making a big mistake: Whole Foods will fade into the background noise of every other grocery store and become irrelevant. The whole point of Whole Foods is there's things you can't find anywhere else. You eliminate those things and it's Just Another Grocery Store; at that point it may as well have been turned into a Winco (which I'm not saying to bash Winco, I buy basic stuff there, but there are things I must have for health reasons I can only find at Whole Foods
    • by p51d007 ( 656414 )
      They bought them, not to keep the brand alive, but to get into the grocery store market. You can bet they will cut & chop, to knock the price down.
      • Well, as I keep saying, they'll destroy it that way. The people (like me) who shop there because of the more specialty things you can't find in most places will go elsewhere, and then they're competing with purchasing giants like Winco. They'll be trading high-middle-class and above money for middle-middle-class and below money.
  • Never been to a whole foods, none in my area, but it sounds like Amazon will do the race to the bottom to compete with other large chain grocery stores.
  • by CHK6 ( 583097 ) on Monday June 19, 2017 @11:08AM (#54648043)
    So Jeff wants to lower the prices of goods to allow people with low-income access to fresh produce. And to do this, Jeff will lay off the cashiers that make the lowest income in favor of automation. So exactly how will those laid off with no income be able to purchase these lower priced goods?

    If we are not careful automation will become the ouroboros that will undo capitalism.
  • I despise self-checkout. Amazon basically ensured I'll be avoiding Whole Foods from now on. That, and the cheapening of the inventory is creating a business opportunity for the kind of company that Whole Foods used to be, correcting the mistakes that Whole Foods made along the way.

    I propose Bellerophon [wikipedia.org] Foods.

    • Computers taking American jobs.
      Computers area not even citizens.

    • I've yet to come across a company that's gone for 100% self-checkout. All have a mix of both self-checkout and judgemental employee checkout. So if you want someone at Whole Foods to admire the fact you spent $20 on a can of lentil soup, they're continue to have someone there to do it, while the rest of us checkout quickly at the self-checkout, and pay less because of it.
  • My grocery store doesn't have self-checkout. A number of years ago one of the stores tried it. The machines didn't work right. Apparently it wasn't just me, because they quit offering it and none of the other stores around here tried it.

    This was years ago, so maybe the tech wasn't ready, or maybe they just tried to cheap out and got crappy machines. Either way, it left a bad impression on me, and I'm not eager to try it again.

    • Its just you or your location. Where I'm at (Seattle area), most stores have a self check out and it seems to work very well.

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