Whole Foods

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Amazon To Begin Offering Prime Members Discounts At Whole Foods

May 16, 2018 - 2:15 pm

NEW YORK (WCBS 880/AP) -- The grocery store war is heating up, as Amazon – which owns Whole Foods – begins offering discounts to its Prime customers.

The benefits start Wednesday at stores in Florida and will expand nationwide this summer. Prime members will get an additional 10 percent off sale items and exclusive deals on certain groceries.

This week in Florida, for example, Prime members can get $2 off a pound of organic strawberries or save $10 a pound on wild halibut steaks. Amazon wouldn't say if it plans to add the benefits to Whole Foods stores in Canada and the U.K.

Whole Foods has not yet indicated exactly when it will offer the Amazon Prime discounts nationwide, Spencer Soper of Bloomberg told WCBS 880’s Pat Farnack.

“They didn’t signal precisely when, but just that they would be expanding nationwide this summer, so, you know, coming pretty soon,” he said.

Since it bought Whole Foods last year, Amazon has cut prices on some groceries, begun offering same-day delivery to Prime members in several cities and extended its 5 percent cash-back Amazon rewards credit card to Whole Foods purchases. But turning its Prime membership into the Whole Foods loyalty program could attract more people to its stores.

The big question is whether Whole Foods’ share of the grocery market will increase because of the Prime discount. Right now, Whole Foods only has about 1 percent of the market.

“They’ve been trying to get into the grocery race for more than a decade with little to show for it, and so there’s definitely a lot of pressure within Amazon to boost its presence in grocery. They found that it was the type of thing that it was difficult to sell online because people like to go to the store and inspect produce; inspect meat; inspect a lot of the fresh foods that they want to buy before buying it, and so now, they’re trying to integrate their e-commerce platform with a physical store play, basically targeting this $800 billion category that’s dominated by Walmart,” Soper said. “An interesting thing there is that you have big-box retailers like Walmart, Target that also sell groceries and really use them as an enticement to get people into the store.”

Grocery store chains are already competing with Amazon, Soper said. Many are offering grocery delivery, and in New York, even small stores offer delivery given the high residential density, Soper said.

Some larger chains are also offering delivery either on their own or in partnership with startup companies, Soper said. There is also a pickup service model known as “click and connect,” where customers order groceries online and head to the store to find them waiting, he said.

“But one thing is that for a lot of people, it’s not such a problem. A lot of people still like to go into the store; still like to look around… and some of these places, you know, they’ve invested in creating the right atmosphere; a pleasant atmosphere,” he said. “So for some people, it’s a solution looking for a problem.”

Amazon said last month it had more than 100 million paid Prime members worldwide. That was before it announced it's raising the price of Prime membership to $119 a year, up from $99. Prime members get fast shipping from Amazon and other perks, like access to its video streaming service.

To show that they're Prime members, shoppers can scan the Whole Foods app at the register or give the cashier their phone number.

(© 2018 WCBS 880. The Associated Press contributed to this report.)