Amazon.com Inc. completed its $13.7 billion purchase of Whole Foods Market Inc. on Monday and immediately slashed prices by up to 43 percent for some of the grocery chain's bestselling products.
Prices were lowered for Whole Foods' bananas, large brown eggs, salmon, avocados, baby kale and almond butter, among other groceries.
Amazon had said last week that it would cut prices when the deal closed so that Whole Foods _ whose natural and organic products often carried premium prices that resulted in the upscale chain being derisively dubbed "Whole Paycheck" _ would instead start to become "affordable for everyone."
"It's impressive they would execute the pricing strategy so quickly," said Mark Hamrick, senior economic analyst at Bankrate.com.
More price cuts on more items are expected at the 470 Whole Foods stores in the United States, Canada and Britain: "This is just the beginning," the companies said.
It's that aggressive approach to pricing, a hallmark of Amazon, that has sent shock waves through the $611 billion U.S. grocery industry.
Rival supermarket chains, which already operate with thin profit margins, are expected to face additional pressure to keep prices down and strengthen their loyalty programs or risk losing shoppers to Whole Foods.
Stocks of rival grocers fell again Monday in response to Amazon's move. Meanwhile, Amazon edged up 0.1 percent to $946.02.
Amazon, the e-commerce giant, plans to give its Amazon Prime members further price savings and other in-store benefits at Whole Foods. And it already is selling its Echo and Echo Dot voice-assisted devices in Whole Foods stores as part of its plan to integrate the two companies.
Prices of organic bananas were cut 30 percent to 69 cents a pound from 99 cents; organic avocados fell 29 percent to $1.99 from $2.79, and organic rotisserie chicken dropped 29 percent to $9.99 from $13.99.
Store displays showed the "new lower price" on items along with the prior price, along with signs that said "We're Growing Something Good _ Whole Foods + Amazon."
Outside a Whole Foods store in Los Angeles, shopper Lee Adams looked at her receipt Monday and declared that prices had not changed for the vegan items she bought, including burgers and cheese. But she welcomed the initial price cuts, which Whole Foods said were not for a limited time only.
"If it's not a gimmick and they go lower and stay low, that would be amazing," Adams said.
Another shopper, Danny Hillel, said he noticed that prices of sandwiches and pizza "were still the same." But he added that "if prices do go lower, probably I would shop more here. It's a great thing as long as the quality stays the same."
Whole Foods was struggling before Amazon announced its buyout plan in mid-June. A combination of Whole Foods' lofty prices and inroads by rival supermarkets in selling their own organic and natural foods had slowed Whole Foods' growth.
"A great brand was on the verge of irrelevance (or at a minimum, marginalization) when (Amazon) announced the acquisition," analyst Karen Short of Barclays Bank said Friday in a note to clients.
Now, "price reductions will likely be broad-based" at Whole Foods, and that means "goodbye Whole Foods as we know it," Short wrote.
When asked to comment on Amazon and Whole Foods' moves, Kroger spokeswoman Kristal Howard said that her own company is "very proud of the role we've played in making natural and organic products more affordable and accessible to all customers, especially for shoppers on a budget," and that Kroger has an "unending commitment to lower prices on conventional products as well."
Albertsons Cos., a privately held firm that owns the Albertsons, Vons and Pavilions grocery chains, declined to comment on Amazon's actions at Whole Foods.
Besides lowering prices for all Whole Foods shoppers, Amazon could kick-start Whole Foods' growth by tying the grocery chain to its Prime membership, which costs $99 a year and also includes free shipping of Amazon products as well as video streaming.
Whole Foods' prices "were off-putting to a lot of potential customers and for good reason; a substantial part of the population felt it couldn't afford to shop at Whole Foods," Hamrick said.
But many of those people probably have Prime membership and "now will get an added incentive to shop at Whole Foods" because Prime will, in effect, become a Whole Foods reward program, he said.
Amazon does not disclose the number of Prime accounts, but analysts estimate that the figure is 65 million or more.
On Amazon's website Monday, the company said that "Amazon and Whole Foods Market technology teams are now beginning to integrate Amazon Prime into the Whole Foods Market point-of-sale system, and when this work is complete, Prime members will receive special savings and in-store benefits."
Amazon also plans to add Amazon Lockers at select Whole Foods locations, enabling customers to pick up or send back returns of Amazon.com products at their nearby grocery store.
