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Amazon to Boost Grocery Presence With Price Cut Strategy

Zacks Equity Research

Amazon AMZN is firing on all cylinders to strengthen grocery retail business driven by its aggressive retail strategies.

In fact, the online retail giant is leaving no stone unturned to gain further momentum among grocery consumers.

Price cut is generally the go-to strategy for any retailer, and Amazon is no exception to that. Whole Foods store’s plans to sell hundreds of products at a lower cost are evidence of the same.

The company will start slashing prices at Whole Foods stores from this Wednesday. The initiative will focus primarily on fresh produces such as green vegetables, tomatoes and tropical fruits.

Move to Aid Growth

Reportedly, Amazon with its latest move aims at ensuring savings of up to 20% on an average to customers post the implementation of price cut policy. This is likely to increase customer traffic at Whole Foods store which in turn will aid Amazon’s position at U.S. grocery market.

Additionally, the company’s Prime subscriber base is likely to grow due to slashed price items at store. Further, Prime members will benefit the most as they already get additional 10% off on discounted products.

Additionally, Whole Foods customers trying Prime online will get $10 discount on a $20 purchase throughout April. Moreover, the company is increasing the number of Prime exclusive deals at Whole Foods.

Consequently, expanding customer and Prime subscription base will drive the company’s top line.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM) | Amazon.com, Inc. Quote

Whole Foods’ Initiatives

Amazon’s growing initiatives are likely to strengthen Whole Foods’ reach, which remains a positive. The latest move is in sync with this.

Apart from the recent initiative, the company intends to set up additional Whole Foods stores across more U.S. cities and suburbs in a bid to facilitate fast delivery services to more grocery shoppers.

Recently, Whole Foods Market introduced a digital catalogue that lists several products from the store under different segments for instance produce, dairy, snacks, seafood and prepared foods, to name a few. Moreover, the products are listed under dietary preference categories namely — Whole Foods Diet-approved, Engine 2, vegetarian, vegan, gluten-free, paleo-friendly, keto-friendly, sugar-conscious and dairy-free, to name a few.

Strengthening endeavors of Amazon with regard to Whole Foods are likely to disrupt the U.S grocery market further and intensify the competition for big retailers including Walmart WMT, The Kroger KR, Target TGT and Sprouts Farmers Market.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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