A private brand paradise
When Amazon bought Whole Foods Market in August 2017, the natural foods grocer was struggling. The company had just reported its worst performance in a decade: a sixth consecutive quarter of declining same-store sales. The retailer had a reputation among shoppers for being “too expensive.” There were viral videos about dirty stores and complaints on Twitter about the quality of prepared foods.
My, how far Whole Foods has come since then.
Today, more than a year and a half after Amazon took over, Austin, Texas-based Whole Foods has turned around its same-store sales — bigly.
In a Jan. 31 conference call with analysts, Brian T. Olsavksy, Amazon’s senior vice president and chief financial officer, said, “Whole Foods’ sales growth year-over-year on an apples-to-apples basis was approximately 6 percent.” While there are many reasons for the turnaround, such as expansion of grocery delivery and grocery pickup, other factors such as pricing and private brands are playing key roles. In fact, Whole Foods has become a sort of private brand paradise.
While the retailer has lowered prices on a variety of branded products, the value in store-branded products is through the roof — as long as you’re an Amazon Prime member, that is. Prime members get an additional 10 percent off all sale products at Whole Foods, and there’s a certain “cool kid effect” when you scan your Prime membership number at checkout and see the savings light up in red on the screen.
I headed to the Whole Foods in South Tampa, Fla., to check out the deals on Whole Foods’ quality private brands. Here’s a sampling of how much I saved on some of the products:
Whole Foods Market Easy Peel White Shrimp
Original price: $19.99 a pound
Sale price: $12.99 a pound
Prime discount: 10 percent off
Total savings: $7.70
365 Everyday Value Kettle-Cooked Potato Chips
Original price: $2.29
Sale price: 2 for $4
Prime discount: 10 percent off
Total savings: 49 cents
365 Everyday Value Daily Probiotic
Original price: $15.99
Sale price: $14.39
Prime discount: 10 percent off
Total savings: $3.04
Whole Foods Market Brownie Bites
Original price: $8
Sale price: $7
Prime discount: 10 percent off
Total savings: $1.70
When you take all of that savings and add the semi-luxurious Whole Foods’ shopping experience, you realize that Amazon might have found the value proposition most attractive to today’s American consumer. It’s one reason why Amazon might have decided to shelve its 365 by Whole Foods banner: The price gap between groceries at Amazon, Whole Foods and 365 by Whole Foods stores might have decreased enough that there is no longer a need for all of these separate banners.
I think Amazon will keep becoming more aggressive about expanding private brands and lowering prices across its grocery banners. With the right prices, store brands, assortments and footprint, the sky’s the limit for Amazon — and Whole Foods, of course.
