Amazon's Latest Grab For Prime Members Involves Cheaper Turkey
Amazon (AMZN) Prime members can now get their organic and antibiotic-free Thanksgiving turkey at Whole Foods for a little bit cheaper than everyone else.
XAutoplay: On | OffThe massive e-commerce company, which bought Whole Foods in August, is offering a discount on organic and no-antibiotic turkeys for anyone who enters one of the upscale grocer’s airy, lushly stocked stores. But Prime members can buy organic turkeys for $2.99 a pound and antibiotic-free ones for $1.99 a pound — that’s 50 cents cheaper than the discount for people who aren’t Prime members.
The discount is the latest attempt by Amazon to draw more customers into its Prime membership program. The move could also help Whole Foods compete for a customer it hasn’t always been successful at attracting — that is, the many who don’t have $10-$20 to blow on, say, a sampling of Robusto and a bottle of Saison Dupont.
“This offer is a sneak preview of the special savings and in-store benefits Prime members can expect when Prime becomes the official rewards program of Whole Foods Market,” the companies said in a release.
Other items will have their prices trimmed starting Wednesday as well. Those items include some boneless skinless chicken breasts, raw peeled shrimp, potatoes, Chobani yogurt, pasture-raised eggs, canned pumpkin and salad mixes.
The companies said those price cuts were “in addition to the reduced prices that customers are already enjoying.” After Amazon bought Whole Foods, the grocer slashed prices on beef, eggs, bananas, fish and other items.
Amazon closed down 0.9% at 1,126.69 in the stock market today. The stock is still within range of a 1,083.41 buy point of a late-stage base. Grocery-store operator Kroger (KR), seen as a potentially big loser in Amazon’s foray into groceries, fell 1.9%. Sprouts Farmers Market (SFM), which turned out strong Q3 results despite Whole Foods’ earlier price cuts, lost 1.8%. Supervalu (SVU) edged up 0.2%.
Big-box chains that also sell groceries like Target (TGT) and Wal-Mart (WMT) dropped 10% and 1.4%, respectively, after Target gave a disappointing earnings outlook and warned of a “highly competitive” holiday quarter.
IBD’S TAKE: In a discount world, companies like Amazon and Target are looking to private labels to make a bit more money.
Grocery stores over the past year have struggled with lower prices due to a glut of certain types of goods. Consumer preferences have also shifted to the fresher items often found on the perimeter of the store, rather than the prepackaged goods in the center aisles.
While Amazon’s deep pockets give Whole Foods more room to cut prices, Target and other grocers, whose value game is stronger, have also tried to be a little bit more like Whole Foods.
But while Target has tested a few new grocery strategies, the results have been “underwhelming,” an Edward Jones research note said Wednesday.
“We expect the issues within the grocery business will continue to negatively impact results for the next few years because the company lacks a clear, defined strategy to improve the business,” it warned.