Amazon: Whole Foods Plan Hints at Price Cuts, Automation
Jun 18, 2017
When Amazon completes its acquisition of the grocery chain Whole Foods, announced on Friday, the e-commerce giant plans to cut prices at the premium grocer while maintaining its reputation for high-quality boutique foods. The push for lower prices could be fueled by automation, staff reductions, and inventory changes.
The plans were first reported by Bloomberg and attributed to a source familiar with them. According to that person, Amazon also plans to add automated checkout systems at Whole Foods, which may include the technology under evaluation at the AmazonGo convenience store in Seattle.
That would mean fewer workers running checkout lanes. An Amazon representative quoted in the report denied that any layoffs or automation initiatives were planned for Whole Foods.
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How will Amazon reduce Whole Foods' legendary "Whole Paycheck" reputation? Its plans could also include inventory changes that would eliminate the most expensive items from shelves and introduce more private-label goods.
Whole Foods' reputation has become a major pain point for the grocer, which has steadily lost sales to lower-priced competition—including Amazon. In February, after six straight quarters of falling sales, Whole Foods closed nine stores. It has already been lowering prices and experimenting with a lower-priced store format with fewer employees, 365 by Whole Foods.
True or not, the rumor of job cuts and automation points to a potential sticking point in the pending acquisition. Whole Foods has been recognized as one of Fortune’s 100 Best Companies to Work For every year since the list was created in 1998. It's described by employees as a workplace offering fair pay and a welcoming environment.
Amazon, on the other hand, has been described as having an intense workplace culture marked by infighting and high turnover among staffers. Work conditions in its warehouse-like fulfillment centers have been described as demanding and even dangerous. Those divergent approaches to labor could well clash when the acquisition closes.