Whole Foods on Wednesday launched a much-awaited loyalty program that provides exclusive discounts to Prime members, including 10 percent price cut on hundreds of goods beside special weekly deals. The latest move by the company, owned by e-commerce giant Amazon, will further intensify the price war in the U.S. grocery market.
The company has rolled out the program in Florida and the same perks will be made available in the remaining stores across the country starting this summer. Seattle, Washington-based Amazon earlier introduced two-hour delivery from Whole Foods stores for Prime customers’ free-of-cost.
The latest loyalty plan will test if Amazon’s $13.7 billion acquisition of Whole Foods would create much feared disruption and extreme price war in the $800 billion United States grocery market lead by retail giants including Walmart Inc and Kroger Co.
Whole Foods runs about 463 stores in the United States and those account for nearly 1 percent of the fragmented grocery market of America. Co-founder and Chief Executive Officer of Whole Foods, John Mackey said in an interview that the company has gained momentum since its merger with Amazon last year. Mackey added that closely monitored basket size has increased since the tie-up, though he didn’t offered details. Basket size refers to the number of products purchased in a single transaction.
Analysts at Morgan Stanley think that the latest loyalty program could make Whole Foods comparatively cheaper than conventional grocery retailers for nearly 8 million of its customers who have Amazon Prime membership.
Prime customers can feed their cell numbers at checkout or scan an app to avail the discounts.
Small grocery retailers, who still represent a big portion of U.S sales, usually have extremely low margins. They will also come under immense pressure, as German retailer Aldi and Lidl have also cut prices.