Amazon.com’s slashed prices leave rivals reeling

Bloomberg

A price war has raged in US supermarket aisles for well over a year, bloodying retailers big and small. On Monday, Amazon.com Inc. plans to toss a smart bomb into the fray.
The online giant’s move to slash prices on everything from organic baby kale to fair-trade bananas on the same day its $13.7 billion acquisition of Whole Foods Market Inc. closes showed the “high-velocity decision making” Amazon founder Jeff Bezos claims as his hallmark, and sent shares of Kroger Co., Costco Wholesale Corp. and Wal-Mart Stores Inc. reeling. Amazon will also begin selling Whole Foods’ store brands on its site, install Amazon pickup lockers in some locations and meld its Prime programme into the upscale grocer’s operations.
While this won’t exactly bring responsibly farmed salmon to the masses—after all, Whole Foods stores will remain in high-rent neighborhoods—the price reductions could draw in curious new shoppers and present brick-and-mortar retailers with a dilemma. Do they follow suit and see their margins squeezed, or hold fast and risk sacrificing sales in one of the few areas of the food industry that’s actually growing?
“Changing prices across the board is not a simple process for most retailers,” said Greg Portell, a partner at consulting firm AT Kearney. “It takes time and labour.
What Amazon has done is bring a level of dynamic pricing that will have to be matched by anybody selling food. It will disrupt the way the sector works.”
European companies with no ties to the US, such as Great Britain’s Tesco Plc and France’s Carrefour SA, saw their shares decline.