One way to get on the wrong side of Whole Foods CEO John Mackey is to bring up the company’s “Whole Paycheck” moniker.
Certainly the high-end grocery chain has not always helped itself in that department—$5.99 asparagus water, anyone?
But Mackey’s well-known ire over the term is also somewhat justified. Over the years, as the company fought to reduce its pricing with both its 365 private label and cost cutting, Whole Foods(WFM) still couldn’t shake its expensive reputation. It became a label that the company no longer fully deserved—and one that likely kept it from attracting new customers.
That was one reason the grocer announced in 2015 that that it would launch a new chain of stores—Whole Foods 365—rather than go after a more price-wary customer with its flagship brand. At the time, then co-CEO Walter Robb said the decision came from a sense of “realism about what Whole Foods is.”
Mackey told me then that one of the issues the company struggled with was that, even though it could match Trader Joe’s pricing, Whole Foods was perceived as pricier because “we still had expensive stuff.” It sold the $7 bottle of wine, but also the one that cost $200. Mackey believed that the 365 chain, by curating a product mix comprised only of lower-priced items, would help with the company’s overall image.
Now Amazon (AMZN) may be stepping in to serve that purpose instead. The two companies announced Thursday that when Amazon’s acquisition of the grocer closes on Monday, Whole Foods will immediately offer lower prices on some of its best-selling staples like bananas, avocados, almond butter, responsibly farmed salmon, and organic large brown eggs. Amazon Prime members will also receive special savings.
Amazon will also start selling Whole Foods’ 365 brand online. It will be the first time the Whole Foods private label, the most desirable in the organic and natural space, will be widely available digitally. Not only does this open up a whole new customer set to the supermarket chain, but it also means that this customer’s first introduction to the brand will be the company’s most competitively priced items.
Even if Amazon didn’t have plans to reduce prices, its mere association with Whole Foods would have a much-needed halo effect on price perception. Amazon, after all, is known for aggressively lowering prices at any cost.
