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Amazon Has a Plan to Shed Whole Foods' 'Whole Paycheck' Image

By Published on .

The price war is on.

Amazon, wasting no time, is cutting prices on more than a dozen best-selling staples at Whole Foods come Monday, the day its $13.4 billion purchase of the supermarket chain is set to close.

The announcement, made Thursday by Amazon and Whole Foods, also noted that more price cuts are to follow. Plus, once tech details are worked out, they said, Amazon Prime will become the customer rewards program at Whole Foods. That means Prime members will receive special savings and other "in-store benefits," according to the statement.

Whole Foods declined to say how much the prices will drop, and also is not discussing how it will promote these lower prices to shoppers. The chain was given the nickname "Whole Paycheck" by shoppers who covet its organic goods but feel they're overpriced.

Now, with Amazon's backing, Whole Foods plans to cut some prices, putting pressure on retailers that have been adding organic items to their own lineups to stay competitive. The price cuts also put even greater pressure on food marketers. Shares of Amazon were trading unchanged at $958 apiece Thursday afternoon, while shares of Wal-Mart, Kroger and other big grocery retailers fell. So did the share prices of major packaged-food companies including Campbell Soup, General Mills, Kellogg and Kraft Heinz.

"Whole Foods has always been known as a higher-end, more-expensive grocery retailer, but now, with more affordable pricing, consumers might drive that extra mile to shop at Whole Foods as compared to a grocery chain that is right down the street," says Judge Graham, CMO at data marketing agency Ansira.

The price drops that take effect Monday are for items including Whole Trade bananas, organic avocados, organic large brown eggs, organic responsibly farmed salmon and tilapia, organic baby kale and baby lettuce and more. Other items getting the lower-priced treatment include "animal-welfare-rated" 85% lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken and the chain's own brand of 365 Everyday Value organic butter.

Amazon and Whole Foods also said that Whole Foods' private-label products will be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. And Amazon Lockers, where Amazon.com orders can be delivered rather than being sent to one's home, will be set up in select Whole Foods stores. Customers will also be able to send returns back to Amazon by visiting a Whole Foods store.

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