Amazon’s August acquisition of upmarket grocery store Whole Foods for $13.7 billion, has proved positive for both businesses. Data provided and analysed by Foursquare Labs Inc., showed an 25% increase in Whole Foods traffic – footfall and online - helping to lift the Amazon stock price.
The rise in business for the upmarket food store was attributed to the price cuts Amazon made almost immediately. Price cuts of up to 40% were made on some goods, which played a big part in encouraging more consumer purchases.
Whole Foods has struggled to lose its reputation for being on the pricier side of grocery stores. However, for many items, it simply was at the higher end. But now, Amazon is helping to change that.
Amazon shares have been buoyed by the improved consumption of Whole Foods goods. One potential problem going forward, that has been raised by analysts, is that while the price of Whole Foods value range has been reduced, the premium range hasn’t changed much
Taking the decision to reduce the premium range of organic food products would hit margins. But, it would improve the store’s image and potentially attract a more sustainable increase in consumption. It’s a tough call to make, and one Amazon is likely mulling.
In other Amazon related news, the online giant is considering the base for a second US headquarters. The retailer has been keen to expand from its Seattle hub for some time and has now invited states and local Governments to submit proposals.
The latest updates suggest Boston is a current favourite, although it’s still early days. Boston is said to be a popular location due its proximity to Harvard University and Massachusetts Institute of Technology. There are also nonstop flights from Seattle and Washington, D.C., available.
So far, no decisions have been made. However, Amazon already has close links with Boston following the 2012 purchase of robotics firm Kiva Systems Inc.