Amazon cuts prices 43 per cent at Whole Foods Market

Amazon.com Inc cut prices as much as 43 per cent on the first day as owner of a brick-and-mortar grocery chain, Whole Foods Market.

The $800-billion supermarket industry was shocked by the online retailer's $13.7-billion acquisition of Whole Foods as the upscale grocery promises to bring about disruptive changes to the way customers shop for groceries.

According to commentators, the price cut is a sign that Amazon is serious about taking on competitors such as Wal-Mart Stores Inc, Kroger Co and Costco Wholesale Corp.

''Price was the largest barrier to Whole Foods' customers,'' said Mark Baum, a senior vice president at the Food Marketing Institute, an industry group, Bloomberg reported. ''Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest.''

Amazon has cut prices for Whole Foods' bananas, large brown eggs, salmon, avocados, baby kale and almond butter, among other groceries.

Amazon had promised to cut prices last week when the deal closed so that Whole Foods, whose natural and organic products often carried premium prices that resulted in the upscale chain being derisively dubbed ''Whole Paycheck'', would instead start to become ''affordable for everyone.''

''It's impressive they would execute the pricing strategy so quickly,'' said Mark Hamrick, senior economic analyst at Bankrate.com, Chicago Tribune reported.

More price cuts will become effective at 470 Whole Foods stores in the US, Canada and Britain, and according to Whole Foods, the price cuts were not temporary.

Commentators say it was this aggressive approach to pricing, a hallmark of Amazon, that has sent shock waves through the $611-billion US grocery industry.

They say rival supermarket chains, already operating on thin profit margins, will come under increased pressure to keep prices down and strengthen their loyalty programmes or risk losing shoppers to Whole Foods.