What is your biggest concern as a U.S. citizen right now?
Rising prices, tariff policies, possible recession, job security, international conflicts, cost and accessibility of health care, or something else?
These are all reasonable and important matters to be worried about right now. In fact, as many as 43% of consumers confirmed rising prices as their top concern, followed by tariff uncertainties (29%), according to a McKinsey and Company survey conducted in May.
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The following biggest concerns include the ability to make ends meet (22%), immigration (19%), and cost and accessibility of health care (16%).
This shouldn’t come as a surprise, considering that Trump’s “Liberation Day” announcement of higher tariff rates has shaken up the country. There is a possibility that tariffs may push the economy into recession.
Related: Kroger announces big store change amid price gouging accusations
As many as 60% of surveyed consumers have either changed or plan to change their spending habits because of recent tariff developments. Those who plan to change explained they will cut back spending on nonessential items, or switch to lower-priced brands and products.
What does this mean for retailers? It means that they need to compete more aggressively on price to win customers. Now, the e-commerce giant, which already has had a disruptive impact on the global retail industry, is aiming to win a significant share of the grocery market.
Amazon’s entrance into the brick-and-mortar space
Amazon’s (AMZN) subsidiary Amazon Fresh was launched in 2007 as a grocery delivery service. However, in 2020, the company opened its first physical location in the Woodland Hills neighborhood of Los Angeles. In less than two years, there were 38 locations across multiple states.
As of May 22, there are 65 Amazon Fresh stores in the United States, with around 42% of them in California.
Related: Amazon’s latest big bet may flop
In 2023, the company announced it has paused the chain’s expansion until it sees more favorable results in its grocery segment. Less than a year later, it launched a new store design and upgraded its offering.
More recently, Amazon CEO Andy Jassy explained how tariffs might actually positively affect his company, as rivals will see a bigger impact, reported TheStreet’s Daniel Kline.
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“When you have the broadest selection like we do, and 2 million-plus global sellers like we do, you’re better positioned to help customers find whatever items matter to them at lower price points than elsewhere,” he said.
Now, Jassy is putting his words into action.
Amazon Fresh charging less than the competition
Amazon Fresh has lowered many food prices and is loud about it.
Many common, brand-name items are priced much lower than they are in nearby stores, and there are plenty of bright red low-price signs inside and outside stores on the East and West coasts, reported Grocery Dive, whose journalists visited three locations.
Related: Costco goes bananas to protect members from tariffs
One example is an 8-ounce tub of Philadelphia cream cheese, which was priced at $3.49 on May 27 in an Amazon Fresh store in Bellevue, Washington, compared to $4.99 in a Kroger-owned QFC across the street. The same Amazon store was charging $6.99 for a 12-pack of Pepsi cans, while at QFC, the same pack cost $10.99.
Further, produce prices at Amazon Fresh store in Alexandria, Virginia, were also more affordable than at the nearest Giant Food store. For example, while Amazon Fresh was charging $1.89 for a 1-pound package of strawberries, Giant Good was charging $4.99, or $3.79 for members of the company’s loyalty program.
“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 told Grocery Dive in an emailed statement.
Amazon’s aggressive price competition showcases the giant’s intention to better position itself in the oversaturated grocery business segment. Considering that 43% of consumers are worried about price and 60% plan to change their spending habits, this plan just might work.
Related: Walmart makes surprise cuts as it looks at tariff price hikes
