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Beginning To Understand The Whole Foods' Pricing Dynamic

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Beginning To Understand The Whole Foods' Pricing Dynamic

In an attempt to better understand Amazon.com, Inc. (NASDAQ: AMZN)'s acquisition of Whole Foods Market, analysts at Loop Capital Markets felt it necessary to conduct "before and after Amazon Monday" first-hand checks to better understand Amazon's price cuts.

The prices of a basket of goods at Whole Foods were 31 percent higher on average at Whole Foods compared to a Stop & Shop in suburban Boston prior to "Amazon Monday," Loop Capital's Andrew Wolf commented in a \report. But after the acquisition finalized, shopping at Whole Foods on average was now 2 percent cheaper than Stop & Shop.

This marks a "very good first step" in improving Whole Foods' reputation as being nicknamed "Whole Paycheck." However, it's important to point out that only a limited number of items at Whole Foods are now cheaper and consist mostly of high tonnage commodity goods, such as bananas.

Food Suppliers To Benefit From The Deal

One of the big winners from the acquisition could be Whole Foods' trade partners that help stock its grocery shelves, the analyst said. For example, organic and natural products company Hain Celestial Group Inc (NASDAQ: HAIN) said it saw growth at Whole Foods in the most recent quarter and Amazon reaffirmed that Whole Foods' relationship with vendors will remain in place post acquisition.

Finally, United Natural Foods, Inc. (NASDAQ: UNFI), a distributor of natural, organic, and specialty products, is likely to be the lowest cost distributor in Whole Foods' supply chain, the analyst suggested. The company's contract with Whole Foods extends through 2025 and likely can't be terminated without cause.

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Bananas, Eggs, Salmon And Kale Among The Many Items Now Cheaper At Whole Foods

Latest Ratings for AMZN

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Sep 2019MaintainsOutperform
Aug 2019AssumesBuy
Jul 2019MaintainsOutperform

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Posted-In: Amazon Monday Andrew Wolf food Food Prices Grocery Grocery storesAnalyst Color Analyst Ratings Best of Benzinga

 

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