Did Amazon's Price Cuts at Whole Foods Pay Off?

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Did Amazon's Price Cuts at Whole Foods Pay Off?

10/09/2017
Amazon Price Cuts at Whole Foods

SEATTLE —  When Amazon acquired Whole Foods Market, one of its first orders of business was slashing Whole Foods' prices —  a bottom-line gamble that seems to have been worth the risk.

Leading up to the date that Amazon’s acquisition took effect, Whole Foods announced that it would be rolling out lower prices on a number of its most popular items. In the days that followed, even more items starting selling at reduced prices. Additionally, the acquisition enabled Amazon to incorporate its services like Prime Now and AmazonFresh into Whole Foods’ business model.

The changes that came to Whole Foods following the acquisition — most notably, the price cuts — grew foot traffic into the store by 17 percent year over year in the first week. Three weeks later, foot traffic remained up 4 percent, according to alternative data-intelligence firm Thasos Group’s research report “Competitive Impact of Lower Prices at Whole Foods.”

Thasos Group’s report also indicated that 24 percent of Whole Foods’ new customers are regular Walmart customers, followed by Kroger customers (16 percent) Costco (15 percent) and Target (11 percent). While only 3 percent of Whole Foods’ new customers are regular Trader Joe’s customers, it is Trader Joe’s that’s experiencing the largest number of defections in the aftermath of the Amazon acquisition (10 percent).

“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 vs. online’ battle more broadly. It will be extremely interesting to watch the winners and losers emerge from the data over the coming months.”

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.

To read the full story, visit Convenience Store News' sister publication Progressive Grocer.