Report looks at the battle for shoppers in the grocery war

NEW YORK — Amazon’s acquisition of Whole Foods Market and its bold move to slash prices before the ink on the signed deal was dry has many people watching.

Thasos Group analyzed the numbers, composition and behavior of news customers at Whole Foods following that significant price reduction scheme. The data intelligence firm found that 24% of Walmart’s, 16% of Kroger’s, 15% of Costco’s and 11% of Target’s regular customers accounted for Whole Foods’ new customers the week of Aug. 28. As for customer defections, Thasos found that Trader Joe’s saw an average loss of almost 10% of its daily customers, while Sprouts lost 8% and Target 3% — for now.

It should come as no surprise that curious shoppers who want food choices perceived as healthy for a bargain are willing to see how Whole Foods compares with the stores at which they typically shop. After all, insights, reports, surveys and studies have all concluded that millennial shoppers are not brand loyal, so it’s a reasonable expectation to see some shift in numbers as they try out different stores.

The numbers certainly shifted during the week of the price reduction beginning Aug. 28. Foot traffic to Whole Foods spiked 17% year-over-year that first week — but it doesn’t necessarily spell doom and gloom for grocery and big box retailers. According to Thasos, foot traffic decelerated to 4% year-over-year as of the week ending Sept. 16. While that number still remained elevated relative to the three weeks preceding Aug. 28, it does raise the question of whether curious shoppers will wander back to the Walmarts, Targets and Trader Joe’s. It’s possible they might.

The report also found that Whole Foods was unsuccessful in attracting lower income demographics or new customers from farther away. New customers overwhelmingly belonged to the same upper income demographic as the company's traditional customer base. Defecting customers in the week of the price cuts came from the wealthiest segment of each competing store's customer base.

“Knowing which stores new customers have defected from, what income levels they represent, how far they traveled to get to Whole Foods, and ultimately, whether they will continue to shop there after trying it out, are invaluable pieces of information for both investors and the stores themselves,” said Greg Skibiski, Thasos Group CEO and founder. “We all know that Amazon's acquisition of Whole Foods has the potential to be a game changer in the grocery space, and in the 'brick-and-mortar versus online' battle more broadly. It will be extremely interesting to watch the winners and losers emerge from the data over the coming months.”

The novelty of a new thing is going to lure curious shoppers at first, but an essential factor to consider is that shopping at Walmart, Target and Trader Joe’s doesn’t require an annual fee. Will that 4% drop even more once new shoppers’ 30-day Prime free trials are up?

Click here for the complete report.


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