With Amazon’s acquisition of Whole Foods set to complete on Monday, the company has announced it will begin a wave of price cuts throughout its product range, causing the shares of rival firms to plummet overnight.
“To get started, we’re going to lower prices beginning Monday on a selection of best-selling grocery staples, including Whole Trade organic bananas, responsibly-farmed salmon, organic large brown eggs, animal-welfare-rated 85% lean ground beef, and more,” said Jeff Wilke, CEO of Amazon Worldwide Consumer.
“There is significant work and opportunity ahead, and we’re thrilled to get started.”
With grocery retailers having already become increasingly competitive with each other in recent years, Amazon’s announcement of further cuts has rattled the food industry, wiping $11bn from the market value of the US’s leading supermarkets.
Kroger’s shares dropped by 8.1% on Thursday, with Costco falling 5% and Amazon’s main rivals Walmart declining 2%. The price drops are down to expectations that many other grocery retailers will be unlikely to compete with Amazon’s reductions due to the ecommerce giant’s ethos that values growth above everything, signalled by this announcement.
The company also announced in its release that existing Amazon features including its Prime and Lockers systems will be heavily integrated into Whole Foods, something that is likely to be attractive to consumers with so many already using the ecommerce site.