Amazon.com is stepping up its battle for grocery store dominance, launching a new loyalty program with Whole Foods for Prime customers on Wednesday (May 16).
According to a report in Reuters, the much-anticipated program gives Prime members 10 percent off hundreds of items and deals on weekly specials that rotate. For example, one week the deal could be $10 for each pound of wild-caught halibut steaks, noted the report. The program is now being offered in Florida and will be expanded to other Whole Food stores during the summer.
In an interview with Reuters, John Mackey, chief executive and co-founder of Whole Foods, said the company has gained momentum since the Amazon deal was completed this past summer, with the basket size growing since then. The executive is betting that Prime will help break Whole Foods’ reputation that it is too expensive and portray it as an affordable option for shoppers. With the perks, Reuters reported Whole Foods will be cheaper than traditional grocery stores for the roughly 8 million that use Prime. Mackey did note that more price cuts are likely down the road. “Whole Foods is going to become more and more and more competitive,” said Mackey.
The idea behind the new Whole Foods perks is to increase its bundle of Prime offerings, for which Amazon is raising the annual fee by $20 to $119 each year. With promotions and discounts commonplace in the grocery market industry, Whole Food is aiming to use them to go after Amazon shoppers. For the vendors, it’s a new opportunity to reach potential customers and boost sales amid fierce competition. Organic brands have had a tough time getting U.S. market share — they’ve been accounting for under $500 million in sales and holding market shares of just one or two percent, reported CNBC. With the new Whole Foods perks, the brands could reach more people.
The new perks come as Whole Foods Market has informed customers that it is shutting down its rewards program, which will most likely be folded into the Amazon Prime program. According to media reports from last month, the national grocer sent an email to members stating that the loyalty program would end, and all online accounts closed Wednesday, May 2.