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Lower prices sustaining traffic gain at Whole Foods: Report

Amazon investment drew defections from Trader Joe’s

Amazon’s initial announcement of lower prices at Whole Foods Markets contributed to a 17% year-over-year rise in foot traffic to Whole Foods stores the week of Aug. 28, with traffic still up modestly by mid-September, according to a new report.

Thasos Group, a New York-based research firm, based its report on mobile phone location data that also indicated that Walmart, Kroger and Costco were the leading sources of Whole Foods shoppers during the first week, and that Trader Joe’s, Sprouts and Target saw the greatest percentage of their shoppers defect to Whole Foods in that initial period. The lower prices also tended to draw wealthier customers from competitors, the report said.

(Charts by Thasos Group)

Amazon completed its acquisition of Whole Foods Aug. 28 and concurrently announced a round of everyday lower prices. The Thasos report said Whole Foods’ traffic on Aug. 28, the first day of the lower prices, was up by 31% from the same day last year. By the week ending Sept. 16, traffic was up 4% on a year-over-year basis.

"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," Greg Skibiski, Thasos Group CEO and founder, said in a statement. "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 also indicated the price reductions tended to draw wealthier shoppers from competitors, although they had less impact on the distance shoppers would drive to Whole Foods.

The largest percentages of Whole Foods’ new customers during the week of the price reduction were regular customers of the following competing stores: Walmart (24%), Kroger (16%) and Costco (15%) the report said. When adjusted for the size of the customer base, Trader Joe’s (10%), Sprouts (8%) and Target (3%) lost the greatest percentages of their shoppers to Whole Foods.

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