Whole Foods Just Lowered Prices, Just a Little

Whole Foods Entrance Signage

Whole Foods advertising new, lower prices on produce. Photo: Author

Whole Foods announced recently that they were planning on reducing prices store-wide as part of Amazon’s campaign to combat the image of a “Whole paycheck” grocery store.

The Whole Foods media release gloated, “Starting Wednesday, customers will find new lower prices on hundreds of items throughout the store with an emphasis on high quality, peak-of-season produce, including greens, tomatoes, tropical fruits and more.”

The news received write-ups in many national publications, with warm reviews before the big debut.

In preparation for the anticipated price cuts, I went to my local Downtown Minneapolis Whole Foods and recorded prices for 40 generic staples, ranging from Navel Oranges to Chicken Breast and Sourdough Bread. Check out all the data here. The basket of goods includes both conventional and organic varieties of staples like Fuji Apples and Eggs. The New York Times did something similar with a different basket of goods.

Bottom Line: 7.31% Cheaper

Across the 40 staples, the average price cut — including no cuts — was 7.31%. The greatest price cut was for Navel Oranges and Red Onions, which both were cut by 33.56%, from $1.49 to $0.99 per pound. Twenty-eight staples had no price cut, and none had a price increase.

This does not include price cuts on many name-brand items. However, the aisles of the store were tagged with yellow “sale” prices, but not the “new lower price” featured in the produce area. It could very well be that these sale prices will be temporary.

In the end, this was an arbitrary basket of goods, and your own grocery choices will determine whether the price cuts affect you, if you shop at Whole Foods.

Whole Foods Aisle Spices

Sale prices marked with yellow tags at Whole Foods. Photo: Author

Aldi Stays the Low-Cost Ruler

With Whole Foods supposed new savings, I compared the in-store prices at Whole Foods to the online prices for Aldi on Instacart. There were comparable goods for 22 of the 40 staples in the original basket. Equally weighting those 22 items, on average prices at Aldi were 25.66% lower for the same items. Check out all the data here. Whole Foods did beat Aldi’s price, however, on Navel Oranges, a 3-pound bag of Organic Gala Apples, Organic Baby Carrots, and Red Onions, part of Whole Foods’ strategy to compete in produce.

To Save, Move Near an Aldi

Recently, I shared research on the weak correlation between grocery prices and apartment rents for different store brands like Aldi and Whole Foods. While it is unclear what are the independent and the dependent variables in the relationship, it is clear that living near a Whole Foods is expensive. On average, renting a 1-bedroom apartment near a Whole Foods is $201 more per month, or 20.8% more.

Cost Index Vs. Rentometer Average Rent

The cost of housing generally increases with the cost of groceries. Check out the data behind this chart.

Now it could be argued that the quality or shopping experience is different at Whole Foods versus Aldi. As I mentioned, of the 40 staples I tracked at Whole Foods, only 22 had a comparable product at Aldi, and this was for only generic goods like produce and chicken. Known for its private-label goods, it would be very difficult to find all the name brand products available at a Cub Foods or Whole Foods at an Aldi.

The bigger question is why some people are paying hundreds of dollars per month to buy more expensive food and pay more for rent on apartments that are about the same size. Whatever the answer is, it’s clear that it is preventing some measure of gentrification in those neighborhoods that have an Aldi. In fact, recently, developers asked for a $3.7 million tax subsidy to build market-rate housing less than a mile from an Franklin Ave Aldi and a short walk from the Franklin light rail station. Brian Miller, the executive director of Seward Redesign Inc., was quoted by Miguel Otárola of the Star Tribune in very stark terms. “If the city can’t come forward with TIF, I’m going to tear those buildings down and we’re going to have a contaminated, vacant site for who knows how long,” he said. “The market will not build in that location without assistance from the city.”

Where do you shop for groceries and what do you pay in rent? What do think Amazon’s long-term strategy is for Whole Foods and Prime? Share your recipes and your thoughts in the comments!

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2 Responses to Whole Foods Just Lowered Prices, Just a Little

  1. Monte Castleman April 27, 2019 at 8:49 am #

    A critique on your original article: you’re mixing three different sizes of eggs and the price difference and volume of egg you get with each size is noticeably different. A pound of chicken breast from Whole Foods is the absolutely identical to a pound of chicken breast from Aldi, but a large egg from Aldi is different than an XL egg from Whole Foods.

    I’m also not able to with view only access (or don’t know how to) view the formula for weighting prices, but as a data point the total cost of the basket at Walmart Burnsville is $10.89, compared to $7.89 for Aldi and $15.45 for Whole Foods. A comparison to Hyvee would be interesting, especially since I’m assuming a lot of people from the city shop at the one right on the border at Robbinsdale, but I don’t live anywhere close to one.

    As for Whole Foods lowering prices, It doesn’t seem to make sense to me. Existing Whole foods shoppers are obviously price insensitive or they wouldn’t be shopping there so no worries about losing their customers to Aldi. And a 7.31% discount permanent discount when the same food is double the price isn’t going to lure in many Aldi shoppers.

    If you’re in the market for a Toyota Yaris ($15,635) a 7.31% discount on a Mazda Miata Grand Touring ($30,780) isn’t likely to persuade you to buy one. If you want to get people into the Whole Foods door or to test drive a Miata to decide they just have to have one even if they can get food or a car for half the price or maybe can’t even afford it, I’d think you’d run an advertising campaign.

    But it’s possible Amazon isn’t interested in running a luxury grocery store, and just wants to run a plain grocery store, but Whole Foods is the one they happened to be able to buy. So maybe they plan to slowly move it downscale.

    • Conrad Zbikowski
      Conrad Zbikowski April 27, 2019 at 10:17 pm #

      You are right on your note on sizes and prices of eggs. It is difficult because different stores carry different sizes and don’t always carry a name brand that is the same product across stores.

      You are also right about your critique about the Whole Foods price decrease of 7.31% not making economic sense. I suspect a Amazon executive wanted to rebrand the store as “cutting prices”, but keep the high margins compared to other stores.

      It will be interesting to see how traditional Whole Foods stores compete against Amazon Go stores that are halfway between a Aldi and a WF, but without the cost of cashiers. If Jon from Big Tech can get his lunch sushi for cheaper at Amazon Go, will he trade convenience and privacy for dollars?

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