Analysis: Promotion by press release, Amazon and Whole Foods score again

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Analysis: Promotion by press release, Amazon and Whole Foods score again

By Mike Troy - 11/15/2017

Amazon and Whole Foods continue to earn favorable media coverage for unsubstantiated price cut claims that move markets and confound competitors.

Retailers have been making unsubstantiated claims about low prices for a long time, so Amazon’s strategy with Whole Foods isn’t new, but what makes the practice so effective is the way the marketing message is amplified by media outlets that take the pricing claims at face value.

This phenomenon was in full effect after Amazon and Whole Food distributed a press release at 9 a.m., EST on Wednesday, Nov. 15, that declared, “Amazon and Whole Foods Market announce lower prices on additional customer and holiday favorites.” The lower prices were further said to be, “in addition to the reduced prices that customers are already enjoying.”

This headline was gobbled up my media outlets who offered a range of provocative headlines.

  • A news alert on CNBC declared, “Amazon cuts prices again at Whole Foods.”
  • The Street.com said, “Amazon cuts prices at Whole Foods for the holidays.”
  • Reuters chimed in with, “Amazon unveils more Whole Foods price cuts ahead of Thanksgiving.”
  • Later in the day, the Street.com was back with “Amazon disrupts (again) packaged foods with Whole Foods Price cuts.”
  • Bloomberg also took the competitive implications route with, “Whole Foods price cuts send share of Kroger and Sprouts sliding.”
  • Yahoo Finance went further to say, “Whole Foods slashes prices, food stocks tank.”

All the fuss was caused by an announcement that only offered one detail regarding reduced prices for premium turkeys that were already double or triple other retailers’ promotional prices for standard turkeys.

“These are the latest new lower prices in our ongoing integration and innovation with Amazon, and we’re just getting started,” said John Mackey, Whole Foods Market co-founder and CEO. “In the few months we’ve been working together, our partnership has proven to be a great fit. We’ll continue to work closely together to ensure we’re consistently surprising and delighting our customers while moving toward our goal of reaching more people with Whole Foods Market’s high-quality, natural, and organic food.”

Mackey’s mouth may have been moving, but there was no substance to what he said and there was even less detail about so-called price cuts in the rest of the release. For example, customers will be able to purchase organic turkey for $3.49 a pound and no antibiotic turkeys for $2.49 a pound while the price for Amazon Prime members has been reduced to $2.99 for organic and $1.99 for no antibiotic.

Whole Foods sells a quality bird, so its still pricey organic and antibiotic free turkeys aren’t directly comparable to frozen turkeys sold elsewhere for dramatically lower prices. Throughout the holidays it is common to find turkeys for less than $1 a pound and perhaps a lot lower depending on a retailer’s desire to generate traffic.

 As for other price cuts, Whole Foods only offered that it was also lowering prices on a selection of customer favorites such as value pack of boneless, skinless, organic, antibiotic free chicken breasts, raw peeled shrimp, private label canned pumpkin, organic broccoli, salad mixes, organic potatoes and sweet potatoes.

In other words, pretty much all the same stuff that every other food retailer promotes ahead of Thanksgiving. Whole Foods did not indicate what its new prices would be on the items mentioned, the duration of the reduction or the original price. Had it done so and had the amounts been meaningful maybe then a word like “slash” would have been warranted in a headline.

The company did mention some brands that would see reduced prices such as Lundberg Family Farms, Eden Foods, Pacific Foods, Organic Valley, Tom’s of Maine, Chobani Yogurt, California Olive Ranch, Siggis Yogurt, Applegate and Fage Yogurt. Again, no specifics as to the extent of the price reduction.

The reaction to the price cut news was similar to what happened back in August when Amazon’s acquisition of Whole Foods closed and the company was quick to tout price cuts on key value items such as bananas and steaks. In doing so Whole Foods is employing a very traditional approach and attempting to create a halo of affordability for the rest of its assortment which, by design, has very little overlap with other food retailers’ offerings.