Amazon cuts Whole Foods prices up to 43% on first day

Bloomberg

Amazon.com Inc. spent its first day as the owner of a brick-and-mortar grocery chain cutting prices at Whole Foods Market.
At the Whole Foods on 57th Street in Manhattan, organic fuji apples were marked down to $1.99 a pound from $3.49 a pound; organic avocados went to $1.99 each from $2.79; organic rotisserie chicken fell to $9.99 each from $13.99 and the price of some bananas was slashed to 49 cents per pound from 79 cents. The items marked down had orange signs reading “Whole Foods + Amazon.” The signs listed the old price, the new price and “More to come…”.
Lori McNichol, a resident of Manhattan’s Upper East Side, said she was doing her regular grocery shopping on Monday morning and wasn’t lured by lower prices. Still, she has high hopes for the supermarket’s new owner.
“I thought I could probably get things delivered, which would be exciting,” she said.
Amazon acquired the upscale supermarket chain for $13.7 billion, sending competitors such as Kroger Co., Costco Wholesale Corp. and Wal-Mart Stores Inc. reeling. Whole Foods earned a reputation for high prices, getting the nickname Whole Paycheck.
The cuts add another front to a price war that’s already raging across the supermarket sector. Retailers from Wal-Mart to European-based discounters look to grab shoppers’ attention. The battle has shaved profit margins and prompted companies to look at new selling strategies, like Wal-Mart’s decision last week to sell its goods on Google’s online marketplace. Shares of Kroger fell as much as 2 percent in early trading on Monday.

Grocery price war hits credit markets in US

Bloomberg

Even corporate bond yields are feeling the heat from Amazon.com Inc.’s shakeup of the US grocery sector.
The online retailing giant’s pledge to slash prices at newly acquired Whole Foods Market Inc. has pushed up borrowing costs across the board for US food retailers.
The yield on a Bank of America Merrill Lynch Index of US grocery companies jumped 11 basis points last week to the highest in more than a month.
The moves underscore both Amazon’s massive
influence on retail markets and the fragility of a
sector known for razor-thin profit margins.