Beans means cash for Amazon’s new grocer Whole Foods

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Amazon.com has sold about $US1.6 million ($2m) in Whole Foods beans, breakfast cereal and other store-brand products in the first month since taking over the organic chain, one of the first infusions of cash the e-commerce giant has delivered to the natural grocer through its site. The online private-label sales are among the changes Amazon made after taking over Whole Foods on August 28. The online retailer also permanently reduced prices on eggs, milk, bananas and other high-volume items across stores, trying to undo the chain’s “whole paycheque” image. Third-party data showed an increase in traffic as curious shoppers flocked to Whole Foods stores several days after the price cuts took effect, but the surge subsequently subsided.
It would take additional measures to turn around Whole Foods’ two years of steady sales declines, Mr Goldin said. Amazon and Whole Foods executives have said they plan to institute more discount offers in the months to come. The chain had experienced more than two years of declining same-store sales — a key retailer metric — prior to Amazon’s deal for Whole Foods in June. Grocers across the country are fiercely competing on price to lure shoppers to their stores. Amazon is mass-marketing Whole Foods’ store goods at a time American consumers are looking for healthy food sold under private labels. Of 2764 shoppers surveyed by the Bain & Co data firm this year, 85 per cent said they were open to trying private-label goods, which typically are less expensive. Store brands accounted for more than $US150bn in grocery sales last year, according to the Private Label Manufacturers Association.
Amazon’s online sales of Whole Foods products could be a more direct driver of profit given their brand recognition and the strong margins for private-label goods, said Diana Sheehan, director of retail insights at the Kantar Retail consultancy. “This is probably one of the most valuable things they got from Whole Foods,” Ms Sheehan said. “The 365 private label has probably some of the strongest brand equity in the nation.”
Source: www.theaustralian.com