Whole foods cut prices. It saved us 5 cents.
After purchasing Whole Foods in 2017, Amazon made a couple of bold statements about lowering the grocery chain prices. It made a third this week, saying it had lower prices for hundreds of items, especially fresh produce, without going into detail. It also offers several special discounts to people registered for Prime, the company's member department.
"We will continue to focus on both lowering prices and providing customers with the quality they trust," John Mackey, CEO of Whole Foods Market, said in an announcement.
But we wanted to see for ourselves if a typical grocery store would change a lot.
To test the new prices, we chose the baker's dozen of types of goods we buy all the time, not necessarily the fresh ingredients that would be the focus of the price changes. Egg? Check. Milk? Check. Beer? How could we go without?
We bought these groceries on Tuesday at Whole Foods across the street from Bryant Park in Manhattan. Then we bought the same in the same store on Wednesday, after the price reductions came into force. We didn't use a Prime membership to buy either.
Result: We stored a nickel.
The savings came from a small reduction in the tax cost, not a specific price change. Strawberries, the only manufacturer we bought, were actually more expensive on our second trip – with 50 cents. But that change was offset by the cost of LaCroix, which had dropped by 50 cents.
The price cap for the bill was $ 53.98 both days. But on Wednesday, the tax cost was $ 1.61, compared to $ 1.66 on Tuesday, because LaCroix is taxed and strawberries are not.
On Amazon's Prime Now delivery application in Seattle, price declines were a bit more noticeable. Whole foods have some variations in the selection online, and in different states, the curve was slightly different. The total order, including tax and the suggested tip of $ 5, dropped to $ 58.60 from $ 60.10, a saving of 2.5 percent. The 2-hour Prime Now delivery service – and $ 2 organic strawberries – is only available to Prime members, as Amazon courts heavily because they spend much more.
Whole Foods announcement trumped a 20 percent fall in average for the hundreds of recently reduced items, but the small economic impact in the wagon should not come as much of a surprise.
For more than a year after Amazon bought Whole Foods, prices went down. In March, a basket of 60 items tracked by Morgan Stanley cost 7 percent less than in March 2017, before the Amazon acquisition. The prices of typical grocery stores were down to nearly 3 percent over the two years.
But as other grocery stores, Whole Foods has recently been facing stiff market forces, as manufacturers feel the pressure of bad weather, floods and tariffs. The same curve with 60 elements at Whole Foods was 2.5 percent more expensive in March than a year ago.
Life workers have been able to push some costs back into consumer packaged goods, but dealers have also had to increase prices, said Phil Lempert, a food market analyst.
"The money must come from somewhere," said Lempert.
Whole foods cost far more than regular competitors. Prices were 15 percent higher than in a typical grocery store, driven by a 30 percent premium on proteins, such as meat, according to an analyst note from Morgan Stanley. Although it's not proteins, it's nearly 10 percent more expensive, Morgan Stanley writes.
Whole Foods has focused on giving discounts to Prime members, but Morgan Stanley said they were highly variable, based on the specific month and store. Sometimes the Prime discount had an "insignificant" effect on their basket of goods, but at some point in the fall, the discount was more than 4 percent.
This new cut will not make a big enough stupid to let Whole Foods throw their moniker to be "Whole Paycheck," said Mr. Lempert. "It will never be eradicated."