Despite Amazon's price cuts, Whole Foods is still expensive
Julia La RocheYahoo FinanceAugust 29, 2017
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High-end grocer Whole Foods might have to keep its nickname “Whole Paycheck” even as its new owner Amazon (AMZN) cuts prices.
On Monday, Amazon slashed prices on some of the grocery store’s best-selling staple items including avocados, bananas, organic brown eggs, Fuji and Gala apples, almond butter, and farm-raised salmon and tilapia. At one location visited by Business Insider, the full haul of the 15 items listed on Amazon’s press release would have come out to $97.96. After the cuts, the bill would come out to $75.85, for total savings of $22.11. But those cuts still don’t make Whole Foods the low-cost leader among its peers.
Analysts William Kirk and Shiyao Ling from RBC Capital Markets visited two Whole Foods stores in New York and Austin before and after the price cuts. They too looked at the 15 items included on the press release, but they also considered 49 other items in different categories.
Overall, they found about 25% lower prices for the items from the press release. However they observed “very little” changes for the other items they examined. Among other things, Whole Foods kept the prices for butter, strawberries, carrots and olive oil unchanged.
Sprouts is cheaper
The analysts then visited Sprouts stores in the area to compare how the new prices stack up.
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“For the 14 comparable fresh produce items and eggs we price checked, we noted prices at Sprouts are on average 6.6% lower than reduced Whole Foods prices,” the analysts said. “Further, fresh produce items are still ~13% lower at Sprouts. Out of the 12 produce items, only packaged baby kale is cheaper at Whole Foods. Bananas, Gala apples, and larger pack size onions and potatoes are priced at parity.”
While they didn’t compare the prices of every good, the analysts speculated that Sprouts offered even more value in other categories.
“We mostly price-checked organic items at Sprouts, but believe the conventional product disparity could be even larger,” they said.
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Julia La Roche is a finance reporter at Yahoo Finance.