Amazon Wastes No Time in Cutting Whole Food Prices



Whole Foods plans to cut prices even further

John Mackey Whole FoodsWhole Foods CEO John Mackey says the grocery chain's sales are growing again. Reuters/Lucy Nicholson

  • CEO John Mackey said that the grocery chain's same-store sales were growing again under but that the two companies have had "many, many" clashes where he has had to "speak truth to power" and Amazon has "backed off."
  • Mackey made the remarks Tuesday during an internal companywide meeting, according to audio of the meeting obtained by Business Insider.
  • "I ultimately am not afraid to get fired ... so that gives me a position of strength to speak truth to power when it's necessary to do so, and I've done it many, many times," Mackey said.
  • Mackey also slammed media reports, saying "they just make things up."

Whole Foods CEO John Mackey said Tuesday that the company's same-store sales were growing again under Amazon, which purchased the grocery chain 10 months ago in a .7 billion deal.

"It's been an incredible year," Mackey said Tuesday during a town-hall-style companywide meeting, according to audio of the meeting obtained by Business Insider. "Our increase in sales has been far greater than I anticipated, and it's continuing."

But the relationship with Amazon has also come with many challenges, he said.

"I'm sure that Amazon has probably gotten more disagreement from me than any other single person and possibly more than everyone else combined," Mackey said. "I have the least amount to lose — I have done this for 40 years, I am financially secure, I love Whole Foods.

"I ultimately am not afraid to get fired, so — not that I think they are going to fire me, but I'm not afraid of it — so that gives me a position of strength to speak truth to power when it's necessary to do so, and I've done it many, many times," he said. "And that's been a good thing because Amazon has listened, and they have been very respectful, and they have backed off."

Mackey didn't go into detail about the nature of the companies' disagreements.

In response to an employee's question about what could change about Whole Foods' culture going forward, Mackey said the company's principles and values would remain the same, but "pretty much everything else we can change."

"This is the thing people are most afraid of — it's like, they love Whole Foods, so they don't want it to change," he said.

But in a merger, like in a good marriage, both parties will change over time, he said.

"I would say that those of you that are going to be married — and happily married — are going to change," he said. "You may not intend to, but I promise you: If you don't change, you will not stay married. It just comes with the territory — particularly if you are a man — you will not stay married."

Mackey slams media reports, saying 'they just make things up'

Mackey said that, overall, Whole Foods had made "really good progress" under Amazon.

"I'm overall pleased with where we're at," he said. "Does that mean I love absolutely everything about Amazon? No, I don't. I don't love absolutely everything about my wife either, but on balance I love, like, 98%. That's a pretty good ratio, based on my previous relationships."

Whole Foods doesn't publicly report sales figures now that it's owned by Amazon. When the companies announced the merger one year ago, Whole Foods' quarterly same-store sales had dropped nearly 3%.

Mackey didn't reveal any specific numbers related to sales growth during the meeting, other than saying the growth was higher than what has been reported.

"It's much better than the media reports because they don't have any data, so they just make things up," he said. It's unclear what reports he was referring to.

Whole Foods plans to cut prices even further

Mackey said the biggest drivers of Whole Foods' same-store sales growth were the free delivery of Whole Foods groceries through Amazon Prime Now, now available in about half of Whole Foods stores, and the grocer's new discounts for Prime members.

The company has also been working with Amazon to improve profit margins by minimizing out-of-stocks and leveraging its scale to get lower prices from existing suppliers, other Whole Foods executives said during the meeting.

"Prime affinity and Prime Now are the two biggest initiatives, but also reducing our prices — we are going to be doing more of that over time," Mackey said.






Video: What is Amazon's long-term strategy for Whole Foods?

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Date: 16.12.2018, 20:15 / Views: 32174