It’s now been a month since Amazon took over Whole Foods, and the initial stats have likely kept execs of other grocery stores awake at night. Barron’s reported that real-time location data from Thasos Group showed a 17 percent year-over-year uptick in Whole Foods foot traffic in the first week alone.
Thasos uses location information from hundreds of millions of smartphones to map consumer habits. The information is anonymous and comes from different mobile apps that use GPS info, the company says. In other words, Thasos isn’t tracking individual movements so much as it is watching trends.
And those trends are not good news for Whole Foods’ competitors – particularly, notes Barron’s, Trader Joe’s and Walmart. 24 percent of new Whole Foods customers migrated from Walmart, which currently controls the largest share of grocery store traffic in the U.S. That’s more than from any other chain.
Yet Barron’s suggests that the greatest threat is to Trader Joe’s, seen by many as the poor man’s Whole Foods. When the upscale organic grocer becomes its own poor man’s Whole Foods, where does that leave Trader Joe’s?
With a whopping 10 percent fewer customers, if early numbers are any indicator — but maybe those shoppers were just trying it out? That’s a more substantial loss than Target, Costco, Aldi, Stop & Shop, and Kroger suffered – combined.
By comparison, due to the large size of Walmart’s customer base, its seemingly massive defect rate actually only took a 0.6 percent bite out of its regular shopping population.
However, the good news for Trader Joe’s and others is that the initial numbers didn’t hold. It turns out that, indeed, many shoppers were just trying out the new, lower prices at Whole Foods. Many returned to their grocery destination of choice after a week or two. By the third week after Amazon slashed prices at Whole Foods, the organic grocer’s traffic was up by just 4 percent year over year, and half of Trader Joe’s defectors had returned.
Those who have stuck with Whole Foods, regardless of where they used to shop, share one thing in common: they were from the wealthiest bracket at whatever grocery store they used to shop at. It turns out that, even after Amazon’s price cuts, Whole Foods is still too high-end for the average consumer.
That’s good news for precisely nobody in this equation.
Other grocery stores, noted Barron’s, rely on those wealthy consumers to buy the more expensive goods on their shelves, so even if most of their regular customers came back after the Whole Foods novelty wore off, their bottom lines are still likely to hurt.
It also shows that the price cuts did not accomplish what Amazon had hoped – namely, making healthy, organic groceries available to everybody. New converts were largely the sort of people who already would have chosen to shop at Whole Foods. Lower income customers were not impressed, and average ones were not compelled to drive any further than usual just so they could shop at Whole Foods, Thasos CEO Greg Skibiski told Barron’s.
“Mostly, they stole the richest customers from their local competitors,” Skibiski summed it up.
In Other News…
Amazon has reportedly approached Leclerc, a privately-held French supermarket, about a logistics collaboration. The news comes after a recent report published on French news site Le Monde which stated that Amazon is interested in opening roughly 15 physical stores in Paris, France — thus furthering its venture into the grocery industry. The unsourced report said the company aims to open the stores over the next two years, with inspiration from its non-cash Amazon Go concept stores.
The eCommerce giant’s long-rumored delivery service may actually be coming soon. Reports emerged this week that Amazon is testing the service as part of its push to expand free two-day delivery offerings and solve its warehouse overcrowding problem. Citing two sources familiar with the plan, Bloomberg reported Thursday (Oct. 5) that the expansion of Amazon’s logistics support will push the massive online retail player into more direct competition with UPS and FedEx.
Amazon announced Wednesday (Oct. 4) that its Echo speaker, powered by voice-activated digital assistant Alexa, is now available in India and will be coming to Japan later in 2017. In a press release, the company said Indian consumers will gain access to Alexa and the Amazon Echo by invitation only.
The European Union on Wednesday (Oct. 4) ordered Amazon to pay $295 million in back taxes that it received in the form of illegal tax benefits. According to a statement from the European Commission’s Commissioner Margrethe Vestager, the company has to pay the amount to Luxembourg, which gave the company illegal benefits that resulted in almost three quarters of its profits not being taxed.
Amazon has acquired Body Labs, a software company that uses AI and computer vision technology to create 3D human body models that are true to life and have myriad real-world and B2B software applications — including trying on virtual clothing and creating avatars for video games. This may indicate a continuing and growing interest in the fashion industry.
Amazon is reportedly adding the ability for the Echo to make phone calls even to devices that are not Alexa-enabled. It originally allowed Echo users to make free calls to any other Alexa-enabled devices. Now, anyone with the Alexa app can now make free phone calls to any U.S., Canadian or Mexican phone number without needing any additional hardware.
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