Online retail juggernaut Amazon is flexing its muscle in the brick-and-mortar grocery business, a year after acquiring upscale chain Whole Foods Market for $13.7 billion.
The e-commerce giant now offers Amazon Prime members savings at the Texas-based grocery chain's stores in South Carolina and 22 other states, a move that could nudge other grocers into strategic digital shopping initiatives in the hyper-competitive industry.
Whole Foods operates one store in the Charleston area in Mount Pleasant. A second is on the way in West Ashley. Its other South Carolina locations can be found in Columbia, Greenville and Hilton Head.
Analysts recently told trade journal Progressive Grocer they expect the Whole Foods-Amazon Prime tie-up to capture loyalty of the wealthiest 10 percent of households, the source of most discretionary spending.
They also believe the merger was more about Amazon adding physical footprints for distribution centers than it was about adding customers.
The Amazon Prime digital-deal connection also will allow the company to expand its customer base and amass troves of shopper data not previously collected by Whole Foods.
Whole Foods has already lowered some prices after the merger. The new Amazon Prime deals could force other grocers to review price points in an industry with already razor-thin profit margins.
The new offering at Whole Foods allows Prime members to save 10 percent off items with yellow sales signs and find deals on other items. Its reception has led the grocer to move up its expansion timetable.
“Based on the positive customer feedback and successes we’ve seen over the past month, we’re accelerating our timeline to expand these savings to all of our U.S. stores,” said A.C. Gallo, president and chief operating officer at Whole Foods.
To find the savings, shoppers must download the Whole Foods app, sign up with an Amazon account and then scan the app's Prime Code or use the phone number at the time of checkout.
Amazon recently announced it was raising the price of most Prime memberships by 20 percent to $12.99 a month or $119 a year after a 30-day trial period.