Whole Foods Price Drop to Market Parity
A little over one month has passed since Amazon’s purchase of Whole Foods was finalized and some prices dropped as a result. The media storm that ensued promoted Whole Foods price decreases of 30 – 40%, but the real question is how did these prices compare before the price drop and how do they compare now to market pricing of traditional retailers? Below we take a look at the products that had a price drop and how they compare to the market average across Colorado retailers. Whole Foods was on average 34% higher than traditional grocers on the products that decreased in price. Whole Foods was 36% higher than King Soopers, 32% higher than Safeway and 20% higher than Sprouts on items we compared.
How Whole Foods Price Drop Compares:
The following product pricing decreased at Whole Foods, highlighted by bright orange signage in the store showing the before and after pricing. The biggest price drop in Colorado was for was conventional avocados, which went from $2.29 to $1.49 each. The market average is $1.57 each, so Whole Foods is at market average and even slightly lower on avocados than traditional supermarkets. Target has avocados at $1.94 and Walmart at $1.88 right now, which brought the market average up in the last two weeks.
Organic Fuji apples and Gala apples dropped 33% from $2.99 per pound to $1.99 per pound. The market average is $2.19 – $2.29, so Whole Foods was 31 – 37% higher than the market and is now 9 – 13% lower than the market average for organic apples when looking at pricing averages for two weeks. Natural boneless ribeye steaks dropped to $13.99 per lb. from $17.99 per lb., which was a 29% decrease, but traditional grocers frequently have their natural beef steaks on sale for $13.99, so it too was a market adjustment.
Farm Raised Atlantic Salmon dropped 29% from $13.99 per lb. to $9.99 per lb. and the market average is $8.99 per lb., so Whole Foods is still 10% higher than market average on farm raised salmon. However Whole Foods price of $13.99 per lb. was 56% higher than the market average
How about the rest of Whole Foods meat, produce and egg prices? In our comparison of 26 organic items across Kroger, Safeway, Natural Grocers, Sprouts, Target and Whole Foods, Whole Foods is still 9 – 15% higher than the market average of traditional grocers.
Comparison of 26 Organic Items Across Colorado Retailers:
When you compare pricing of 26 popular organic produce, meat, eggs and packaged food items across Whole Foods, traditional and specialty grocers like Sprouts and Natural Grocers, Whole Foods is still higher than traditional grocers. Whole Foods pricing on these items was actually more in line with Natural Grocers and actually even a bit cheaper on certain items than Natural Grocers.
The difference is likely in the local organic sourcing of produce products, which was obvious in the signage at Whole Foods and Natural Grocers with Colorado farm names splashed all over the store. Time will tell if that sourcing model will be maintained by Amazon.
The cheapest store in our comparison was King Soopers at $84.34 for the 26 items, compared to $97.09 for Whole Foods. For the same list, you’ll pay 15% less or $12.75 at King Soopers than you would at Whole Foods.
The surprising second place winner in this comparison was Target, who’s been making a calculated effort to compete in the organic and natural space for the last few years. They came in at $86.15 for the 26 products we compared, which was 13% lower than Whole Foods. The biggest difference and most notable in Target’s organic selection is that it was all wrapped in plastic, unlike any other grocer who has their fresh organic produce displayed without cellophane wrap. Sprouts came in at $87.77, which is 11% cheaper than Whole Foods, followed by Safeway at $91.23, which is 6% lower than Whole Foods.
The one product where Whole Foods is the cheapest hands down is the packaged organic baby spinach which is priced at $1.97 every day for a 5 oz. package, compared to a market average of $3.43 for the same size package. Whole Foods is 43% cheaper on this product.
Whole Foods is $1.00 per lb. or 38% higher on organic seedless grapes with a price of $3.88 per lb. compared to the market average of $2.88 per lb. As far as organic boneless, skinless chicken breasts, Whole Foods is priced at $8.99 per lb., compared to the market average of $7.79, so they are 15% higher here. The cheapest organic chicken breasts in Colorado are actually not at a traditional grocer – but at Costco, where it’s priced at $5.99 per lb. and you can often get organic chicken at King Soopers for $5.99 per lb.
The noticeable missing retailer in this analysis is Walmart and frankly we did compare the prices for Walmart, however 50% of the products compared are not sold at Walmart or online, so Walmart could not be included in the comparison as a result. Also, Walmart sells a lot of it’s organic produce in bulk packaging – like organic apples in 3 lb. bags, so while you can derive a per unit price, it’s not apples to apples.
Bottom line, while Whole Foods legitimately lowered prices on products through the store, we view this price move as a necessary market-based adjustment rather than as a competitive threat to traditional grocers or specialty stores. The biggest threat in our assessment comes to Natural Grocers whose pricing is as high as Whole Foods, and even higher across many products. Without the backing of the Amazon name and distribution capabilities, it will be challenging for Natural Grocers to have the buying power to compete on price.
Eva Fry is a grocery industry and pricing analyst and the founder of the free, consumer uGrocery price comparison app.