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The retailer is also considering an even bigger opportunity: to convince a bit more of its more than 100 million Premium members in the United States to buy their groceries at Whole Foods.
Amazon has been trying to make Whole Foods more attractive to Prime members since the acquisition. Amazon started by reducing the prices of products like salmon and avocados. Last year, the company began offering an additional discount on sale items exclusively for Premium buyers to strengthen Whole Foods' offering.
Despite these steps, most Premium members still avoid making their purchases in the organic grocery chain. According to a recent survey by Wolfe Research, about 18% of Premium members make their purchases from Whole Foods at least once a month, and 70% of them say that they rarely, if ever, do it.
The high prices of Whole Foods are one of the main reasons why Prime members have stayed out. Although Amazon initially began with significant rebates, Whole Foods prices have risen slightly in recent months and remain well above competing supermarkets.
"Amazon and Whole Foods understand that there are still price collection issues," said Tory Gundelach, an analyst at Kantar.
Although Whole Foods has helped to ensure that natural and organic items are popular with a wide range of Americans, it has become a victim of its own success. Cheap natural foods have been generalized, harming Whole Foods.
Big chains like Kroger, Albertsons and Aldi have taken note of the appeal of Whole Foods and have developed their own exclusive lines of organic foods. Kroger's simple truth grew by 15% last year and is now a $ 2.3 billion mark. Aldi plans to expand its fresh product selection by 40% in more than 1,800 stores across the country.
Natural and organic foods "no longer make use of a specific high income group.This is the way the majority of shoppers eat," Gundelach said. "These items can not really be sold at a higher price."
Price up
Vincent Sinisi, an analyst at Morgan Stanley, found that Whole Foods' prices for a basket of 60 items rose three months in a row and were 15% higher than traditional grocery stores in March, 30% higher in protein. Basket prices rose 2.5% last month from a year ago.
"It is becoming increasingly clear that Amazon has reduced its price cuts," Sinisi said in a research report released on Monday.
But Amazon will again try to lower the prices of hundreds of items at Whole Foods and double the number of weekly offers for Prime members.
Kundar's Gundelach said that grocery stores frequently cut product prices and that the latest rounds of discounts only applied to a fraction of the approximately 60,000 items at Whole Food stores. "It may not have a big impact," she said.
Southeastern Grocers, owner of Winn-Dixie and Bi-Lo, and Tops Markets have recently filed for bankruptcy. Analysts predict that there may be more.
