Amazon has announced it will permanently lower a lot of prices at its newly-acquired supermarket chain Whole Foods. As a result, competitors’ shares immediately plummeted.
Amazon will cut prices for Whole Foods’ best-selling items, starting on Monday. It will implement more price cuts in the next few months, made possible by the chain’s enlarged scale of operations following the acquisition.
The price cuts should also help turn around Whole Foods’ image into a supermarket chain for everyone. Currently, people consider it to be an extremely expensive chain, catering to “hipsters”. The Bureau of Competition in New York even reprimanded the chain two years ago, because it consistently sold certain items at a higher price.
Blow to competition
Consumers will relish the news about the lower prices, but the competition is not dealing with it as well. The Whole Foods acquisition had already sent shockwaves through Wall Street, and this news is a sizeable aftershock. Kroger, Target, Walmart and Ahold Delhaize immediately saw their share prices drop.
Belgian-Dutch Ahold Delhaize, which generates more than fifty percent of its turnover in the United States, instantly lost more than 5 % on the Amsterdam stock exchange after Amazon’s news broke. Analysts now fear a price war in the United States, which in turn will put pressure on share prices again.