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Detailed Report: Competitive Impact of Lower Prices at Whole Foods

Download full report here (PDF, 12 pages)

Amazon Increases Pressure on Brick-and-Mortar

On August 28, 2017, Amazon closed a deal to acquire Whole Foods and immediately implemented price reductions to attract a broader customer base. After waiting for three weeks of live mobile phone location data, we used the Thasos Platform to quantify the competitive impact of the price reduction.

Our analysis covers a broad range of metrics — including new customer growth, attribution, loyal customer defection from competitors, and customer demographics — for customers of Aldi, Costco, Kroger, Publix, Safeway, Sam’s Club, Sprouts, Stop & Shop, Target, Trader Joe’s, Walmart, and Whole Foods.

Key Conclusions

  • Foot traffic to Whole Foods increased 17% year-over-year during the week of the price reduction beginning on August 28.
  • As of the week ending September 16, foot traffic decelerated to 4% year-over-year, but remained elevated relative to the three weeks preceding August 28.
  • 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%
    • Costco:                    15%
  • Controlling for the size of each competitor’s regular customer base, the following stores experienced the highest rates of customer defection to Whole Foods:
    • Trader Joe’s:            10%
    • Sprouts:                     8%
    • Target:                        3%
  • Customer Defection Rates remained elevated for all competing stores as of September 16.
  • The new customers Whole Foods attracted with its price reduction were the wealthiest regular customers of the competing stores.
  • The price reduction did not attract a lower income demographic or incentivize longer driving times to reach Whole Foods’ stores.
Posted October 3, 2017