When Amazon announced it’s purchase of Whole Foods back in August of 2017, The Atlantic wrote, “one of the company’s first moves will be to lower prices on several grocery standards, such as bananas, eggs, and ground beef, as well as Whole Foods standbys like avocados, kale, and almond butter.” This was a signal to investors and consumers of the confidence that Amazon had in their ability to make shopping at Whole Foods more affordable.
Eight months later the acquisition dust has settled and I decided to conduct some in-market analysis to see just how competitive Whole Foods pricing may be. I limited my research to just one of those items initially mentioned, the avocado. It seemed like a solid item that does significant volume but also represents Amazon’s dream to, “make healthy and organic food affordable for everyone.” as an executive stated in the acquisition press release.
I looked at the price of avocados at Whole Foods as well as several other grocery stores of different format types in the Minneapolis area. This analysis was done over a limited period of time with only 1-2 store visits, so pricing may vary beyond what I saw.
Here are my TOP 3 AVOCADO INSIGHTS:
All avocados are not created equally — stores advertise things like, “Large Ripe Avocados” that are perhaps ~20% larger than the avocado average I saw. There are also organic avocados that are typically smaller than non-organic.
2. The price of avocados varies A LOT — both the prices from store to store and the difference between everyday and sale pricing had big swings. Deals likely get run frequently to avoid old product that must be thrown out. Organic avocados drive a price premium, but buying in a multi-pack earns a per-avocado discount.
3. Whole Foods pricing is very competitive — though perhaps not the least expensive. Target had the lowest everyday price though for fairly small avocados, while Lunds & Byerlys had the lowest sale price. Surprisingly, Cub Foods was the most expensive, even though they are known as an everyday low price grocery format.
Here is the data set, from highest to lowest average prices that I saw in my store audit:
Cub Foods (EDLP grocer): Regular price $2.49, Sale price $2.00
Whole Foods: Regular price $1.69, Sale price $1.25
Trader Joe’s: Regular price $1.49, $1.25 in a 4-pack
Target: Regular price $.99
So apparently kudos to Amazon for putting Whole Foods in a very competitive price range for a staple item, the avocado. Is this typical of their pricing strategy or more of a loss leader to get people in the door? That is another (and much larger) pricing analysis that I won’t be conducting, unless they want to pay me of course.
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