Jack Tyrrell specializes in Kakaako, Honolulu, Hawaii luxury condo projects.

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Business News: Prices at Whole Foods drop under Amazon

Rendering of Aeo Whole Foods in Ward Village, which will be Hawaii's flagship Whole Foods location.

Rendering of Aeo Whole Foods in Ward Village, which will be Hawaii's flagship Whole Foods location.

The sale of organic grocer Whole Foods Market to Amazon has already brought down prices at local Hawaii Whole Foods locations.  This is an exciting development, as Ward Village in Kakaako prepares for the Whole Foods flagship store to come to the neighborhood.  The future Whole Foods Market will be the state's biggest, and will be located on the ground level of Aeo, which is scheduled to be complete next year.  The tower will feature a special elevator just for residents into the market, making your everyday shopping more convenient than ever.  

Read more from the Honolulu Star-Advertiser, below.

Ala Moana resident Aki Rey was shocked to find that the price of her favorite organic bananas at Whole Foods Market in Kahala dropped by a $1 to 69 cents a pound Monday, the first day that Amazon took over ownership of the national health food store.

“I’m still shocked about the price, especially bananas,” said Rey, 37. “I’m a big fan of Amazon. I shop at Amazon a lot. I think that’s great for customers. Everybody likes lower prices.”

Amazon.com Inc. acquired Whole Foods Market Inc. on Monday in a $13.7 billion deal and promptly cut prices by up to 43 percent for some products in a strategy to move away from the perception that the upscale grocery store — often dubbed “Whole Paycheck” — is for the rich and unaffordable for shoppers on a budget.

“It’s always been this ‘Whole Paycheck’ thing. I still think you’re gonna have people whose mindset is, ‘Oh this place is for the rich,’ and they’d rather go to their Times or Foodland (where) they feel more comfortable,” said Kaira Resch, 48, of Wilhelmina Rise, who was shopping Monday at the Kahala store. “Now that Amazon’s taken over, those are incredible prices.”

The price of regular bananas dropped to 49 cents compared with $1.19 a pound before the ownership change. Organic Fuji apples fell to $1.99 from $3.99 per pound. Organic avocados dropped to $1.99 from $3.49 each. A box of organic lettuce was reduced to $3.49 from $5.99.

Honolulu yoga instructor Jenia Kiseleva, 36, who shops at Whole Foods at least once a week, said the price changes are welcome, especially as a way to get more people eating better.

“It will be great for people. We need to bring more people to organic food … to raise more awareness,” she said. “It’s going to be easier for people to believe that it’s OK, it’s possible, it’s not that big of a deal to eat organic.”

Aggressive pricing is a hallmark of Amazon. Rival supermarket chains, which already operate with thin profit margins, are expected to face additional pressure to keep prices down and strengthen their loyalty programs or risk losing shoppers to Whole Foods.

Local health foods store Down to Earth, which is expanding in Kakaako, Pearlridge and Kailua, said Whole Foods’ price reductions are “greatly overstated” and that costs have been cut for only a “handful of products.”

“Many of the price drops are not very significant, less than 13 percent. The price reductions appear to be more about marketing and trying to change their ‘Whole Paycheck’ price image, rather than a significant change in pricing,” said Mark Fergusson, chief executive of Down to Earth. “Down to Earth regularly reduces prices, by much more than Whole Foods has done, on hundreds of items every month as part of our ongoing promotional programs. As more people become aware of the benefits of organic and natural foods, we expect that our business will continue to grow and thrive.”

Fergusson added that Whole Foods’ overall impact on the market hasn’t been significant and that the reality is the chain is only a small player in the national grocery industry — 2 or 3 percent of the total market. However, share prices of grocery chain competitors continued to fall Monday, while Amazon’s prices inched up 0.1 percent to $946.02 per share.

“It’s definitely had a very negative impact on share prices. Definitely, the stock market is anticipating some sort of major impact,” Fergusson said. “But the story’s not over yet. We’re not sure what they’re going to do. For Down to Earth, of course, there’s some uncertainty, but I don’t see a sort of game changer happening.”

Besides lowering prices, Amazon said it will give special savings and in-store benefits to Amazon Prime members, a program that costs $99 a year and also includes free shipping of Amazon products as well as video streaming.

Amazon also plans to add Amazon Lockers at select Whole Foods locations, enabling customers to pick up or send back returns of Amazon.com products at their nearby grocery store.



Market News: Why Hawaii can expect an infusion of capital from the Asia-Pacific market

Photo courtesy of Pacific Business News

In September 2015, JTC was pleased to attend the Asia-Pacific Real Estate Congress in Honolulu hosted by the International Real Estate Federation (FIABCI). One of the main focuses of the day was why Hawaii is strategically poised to expect an infusion of capital from the Asia-Pacific markets. Pacific Business News' Duane Shimogawa wrote an excellent overview of the talk, given by Steve Williams of Real Capital Analytics, below:

Hawaii is expecting an infusion of global capital from the Asia-Pacific market, and there are several reasons why this phenomenon will happen, according to Steve Williams, executive managing director of Real Capital Analytics.

Williams, who was the keynote speaker at last week’s Asia-Pacific Real Estate Congress in Honolulu, reasoned that in China, an increasingly prosperous middle-class has gradually built a reserve of 30-year savings.

He also noted that the recovery of the North American economy and the strengthening of its currency in the United States and Canada, has helped increase the interest in investments in these areas, including Hawaii.

“Asian investors see the U.S. as a strong and stable market to invest in,” Williams said, noting that in Hawaii, there’s been a nearly 30 percent increase in more cross-border capital being deployed this year compared to last year.

Additionally, he pointed out that transparency is key to markets experiencing that hope to experience an infusion of capital investments.

“The markets with the most transparency, the most data available, are the most attractive to investors,” Williams said.

In the first half of 2015, there were $400 billion in deals done in U.S., including $67 billion in capital coming via the Asia-Pacific region and $201 billion from the Americas, according to Real Capital Analytics data, which tabulated deals over $5 million in this category.

The conference, which was held in Waikiki from Sept. 10-12, examined the key issues for the real estate profession, including the need to focus on real estate development around active transportation hubs.

Duane Shimogawa covers energy, commercial real estate and development for Pacific Business News.