Amazon Fresh and Whole Foods traffic trends show a two-pronged strategy


According to analysis by Placer.ai, Amazon’s brick-and-mortar supermarket chains Amazon Fresh and Whole Foods Market are moving into distinct market niches amid improved foot traffic and reduced cross-shopping. two banners.

Nearly two dozen Amazon Fresh stores have opened since the first location debuted in Woodland Hills, California, in August 2020. Looking at this store and seven other Amazon Fresh outlets open about a year ago, location-based foot traffic specialist Placer.ai said these locations saw monthly store visits increase from second to fourth quarter of 2021. The Woodland Hills (+24.1%), Whittier (+20.8%) and Fullerton (+17.6%), California stores saw the largest gains during this period .

“The Woodland Hills, Irvine (Calif.), Northridge (Calif.) and Naperville (Ill.) sites all opened in late 2020, the Whittier (Calif.) and Schaumburg (Ill.) sites opened in January 2021, and the Fullerton and Oak Lawn (Illinois) opened in February 2021. As of April 2021, the novelty has worn off, so Q2-Q4 foot traffic trends may reveal how these Amazon Fresh grocery stores integrated into their communities,” Placer.ai author Shira Petrack wrote in a new report tuesday.

Placer.ai

“So far, the data looks promising,” she said. “Between Q2 21 and Q4 21, visits increased for each of the eight stores analyzed. While some of the growth may be due to initial COVID-related capacity restrictions, the fact that store occupancy has increased across the board at these early locations indicates that these sites are generating increased demand over time. – a positive sign for any retailer.

At the same time, the “true shopping areas” (TTAs) of the eight Amazon Fresh stores – the distance traveled by 70% of customers to reach the location – took shape, with six of the outlets seeing their square mile reach shrink. reduce from the second to fourth quarters of 2021. Only Woodland Hills (+10.7% to 25.57 sq mi) and Oak Lawn (+14.9% to 35.47 sq mi) saw their TTA expand during this period. Among those eight Amazon Fresh stores, market reach ranged from 25.52 square miles (Whittier) to 44.96 square miles (Fullerton) in the fourth quarter of 2021, reported Israel-based Placer.ai, which has a US office in Los Altos, California.

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“Most of the Amazon Fresh locations analyzed saw their TTA size decrease or stay the same throughout the year,” Petrack explained. “As visits have continued to increase, the reduction in TTA must mean stores are improving to meet the needs of local customers – and can therefore attract more foot traffic from a smaller area.”

Meanwhile, Amazon’s sister grocery chain Whole Foods saw foot traffic recover after cratering in early 2021, Placer.ai noted. Monthly store visits at Whole Foods fell 21.8% over two years (compared to 2019) in January 2021, but this decline fell to 6.6% in August 2021, then to a decline of 5.2 % in December 2021.

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“While Whole Foods may have missed out on the pandemic-fueled supermarket boom, the natural grocery leader’s recent foot traffic data has proven the naysayers wrong,” Petrack wrote. “The brand has slowly but steadily closed its Yo2Y visitation gap, with visits in December down just 5.2% from 2019 – the smallest visitation gap the brand has seen all year. he company is betting on a complete recovery and even planning an expansion, with nearly 40 new stores in preparation announced in May 2021.”

Despite initial concerns from some industry watchers about cannibalization between Amazon Fresh and Whole Foods, Seattle-based Amazon appears to be cultivating a two-pronged strategy in physical grocery: Amazon Fresh as a value store and Whole Foods Foods as a high-end store. , reported Placer.ai. This is partly confirmed by cross-shopping data. Petrack noted that in the last six months of 2021, Amazon Fresh customers increasingly shopped at Ralphs and Aldi, but less at Whole Foods.

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Thirteen percent of Amazon Fresh customers shopped at Whole Foods in July 2021, but this percentage dropped to 10.3% in December 2021. Conversely, during this period, the percentages of customers from ‘Amazon Fresh going to Ralphs increased from 16.8% to 18.7% and shopping at Aldi increased. from 8.3% to 10.3%.

“Competition is diminishing among Amazon’s offline grocery brands, indicating that the company’s approach to grocery shopping is diverse and complementary,” Petrack said. “While Amazon Fresh positions itself as a value grocer, whose main competition comes from grocers such as Ralphs and Aldi, Whole Foods positions itself as a premium supermarket chain that caters to a whole different base of consumers. With Whole Foods and Amazon Fresh serving different segments, Amazon is poised to solidify its position as the leader in offline grocery in 2022.”

Currently, Amazon has 23 Amazon Fresh grocery stores in six states and the District of Columbia, most recently opening of a 40,000 square foot store in La Habra, California. Amazon announced that more Amazon Fresh stores are coming for California, Illinois, New Jersey, Virginia and Washington. Austin, Texas-based Whole Foods now has 511 U.S. stores in 43 states. Last week, Amazon announced plans to launch a new suburban format for its cashierless Amazon Go convenience stores, which also sell food and groceries and now number 24 in four major urban markets.

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