Whole Foods Price Cuts Paid Off: Report

Foot traffic to Whole Foods Market grew 17 percent year-over-year the week of the price cuts instituted by new parent company Amazon, and remained up 4 percent three weeks later, according to a research report from alternative data-intelligence firm Thasos Group.

Other key findings of “Competitive Impact of Lower Prices at Whole Foods,” which analyzed numbers, composition and behavior of new customers at Whole Foods stores following major price reductions upon the chain’s acquisition by Amazon.com, included:

• Walmart’s regular customers made up the largest percentage – 24 percent – of Whole Foods' new customers in the week of the price cuts.
• Among Whole Foods’ rivals, Trader Joe’s experienced the highest rate of customer defections: on average: Almost 10 percent more daily customers of Trader Joe’s went over to Whole Foods in the week of the price cuts, compared with the week prior. The same calculation for Sprouts came to 8 percent.
• Whole Foods’ new customers overwhelmingly belonged to the same upper-income demographic as the grocer’s traditional customer base. New shoppers in the week of the price cuts came from the richest segment of each rival store’s customer base.

Overall, the report found that foot traffic at Whole Foods rose sharply after the Aug. 28 rollout of price cuts, caused mainly by new customers, but has since that time settled in at lower, but still elevated levels. Walmart, Kroger (16 percent), Costco (15 percent) and Target (11 percent) provided the largest numbers of new customers, while Trader Joe’s, Sprouts and Target (3 percent) saw the highest percentage of their own regular customers switching to Whole Foods. The price cuts weren’t enough to lure new types of customers, however, as the report found that the new-customer demographics, among them income levels and distance driven to a given store, mostly aligned with those of established customers.

“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,” noted Thasos CEO and founder Greg Skibiski. “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 report is available for download at Thasos’ website.

Founded in 2011 at MIT, New York-based Thasos is an alternative data-intelligence platform that transforms real-time locations from mobile phones into objective, actionable insights on the performance of businesses, markets and economies worldwide.