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How Whole Foods' Lower Prices Affect You
By: USA Today
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Don't expect bargains galore -- at least, not yet -- as Amazon takes over Whole Foods Market, but price cuts starting Monday on some key items will certainly make for a nice start.

Amazon says it is going to slash the price on a basket of items ranging from organic Fuji apples to "responsibly-farmed" tilapia, but hasn't specified by how much.

Yet the idea that the upscale natural-foods-oriented chain with an outsized reputation for hefty price tags -- remember its derisive moniker: "Whole Paycheck" -- is charging less has consumers and the grocery industry consider the impact this price-trimming will have on pocketbooks, shopping patterns and competitors.

Here's a breakdown of the Seattle-based Internet titan's inaugural Whole Foods move:

How is Amazon able to lower prices at Whole Foods?

The mechanics of the change are simple: Amazon has a huge supply chain that can streamline delivery like few others. The company's size also gives it tremendous buying power when negotiating with those making the products it's selling.

"Amazon will certainly be able to extract more value from its supply chain by combining the scale it has from its own massive logistics operations along with the infrastructure of Whole Foods," said Forrester technology analyst James McQuivey. "They’ll be able to reduce prices purely through logistics."

That also likely means the price cuts on select items aren't  a quick gimmick to get people into Whole Foods' more than 460 stores, but a long-term approach.

"The (profit) margins at Whole Foods probably were too high," said  Jeff Roster, vice president of retail strategy at the IHL Group,  a research and advisory firm based in Franklin, Tenn. "'Whole Paycheck' wasn't just a  meme. It was pretty darn accurate. There’s room to breathe."



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