Amazon Fresh seems to have seized on a simple strategy to bring shoppers into its supermarkets: Charge less than the competition for a broad assortment of foods — and make sure customers know about it.
During visits to three of the supermarket chain’s locations on the East and West coasts in May, Grocery Dive journalists observed an abundance of bright red low-price signs inside and outside stores. They also found that prices for a number of common, brand name items were sharply lower than what nearby stores charged for identical items.
For example, an Amazon Fresh store in Bellevue, Washington, charged $3.49 for an 8-ounce tub of Philadelphia cream cheese when a reporter visited on May 27, while a Kroger-owned QFC across the street asked $4.99 for the same product. The same Amazon Fresh store charged $6.99 for a 12-pack of Pepsi cans, compared with $10.99 for that size package of the soft drink at QFC.
Price comparisons in Bellevue, Washington
Produce prices at Amazon Fresh were also strikingly low. The grocer’s store in Alexandria, Virginia, beckoned customers on May 29 with 1-pound packages of strawberries for $1.89 each, while a Giant Food store a five-minute drive away charged $3.79 for the same size package of the popular fruit (or $4.99 for shoppers who don’t belong to the Ahold Delhaize banner’s loyalty program).
Price comparisons in Alexandria, Virginia
The Amazon Fresh location in Gaithersburg, Maryland, was also replete in May with items sporting prices that were below what nearby competitors charged.
Amazon Fresh has gone all out to ensure that shoppers know they will find bargains in its stores and indicated that it plans to continue its drive to keep prices down.
The chain’s locations that Grocery Dive visited are decked out with signs proclaiming, “Low prices. Every aisle. Every day.” Other signs remind shoppers that the bargains are “here to stay.” Signs outside point out that shoppers do not need to belong to Amazon Prime to take advantage of the savings — although people can return Amazon packages during their visit.
The intense focus on low prices at Amazon Fresh stores of late underscores Amazon’s pricing heft. It also reflects an evolving quest by the company to carve a niche for itself in the crowded traditional supermarket space.
“As part of our focus on offering customers low, competitive prices to save money every day, we work to meet or beat competitor prices across the vast selection of products in our stores,” Amazon spokesperson Molly McWhinnie said in an emailed statement.
Nearly three years after opening its first Amazon Fresh store in August 2020, Amazon paused the chain’s expansion after concluding that its initial approach was not resonating with shoppers. Less than a year later, it unveiled a new store design with updated signage and a larger array of products.
While Amazon formerly used its Fresh stores as showcases for its Just Walk Out automated checkout technology, it has since taken that gear out and shifted its focus to its Dash Cart smart carts.
Jeff Wells and Catherine Douglas Moran contributed reporting.
Clarification: This story has been updated to reflect the fact that Amazon has indicated that its focus on low prices is not a short-term promotion.
