Thanks for Visiting!

Register for free to get the full story.

Sign Up
Already have a Placer.ai account? Log In

Placer Spotlight: Whole Foods' Journey Since the Amazon Deal

by 
Shira Petrack
 on 
April 4, 2022
Placer Spotlight: Whole Foods' Journey Since the Amazon Deal

It will soon be five years since Amazon acquired Whole Foods Market and made its first foray into the brick and mortar grocery space. We dove into the data to understand Whole Foods’ evolution since the acquisition, see how the legacy grocery is recovering from the pandemic’s impact and determine what may be next for the Whole Foods-Amazon partnership. 

Whole Foods’ Acquisition 

In June 2017, Whole Foods Market and Amazon announced that Amazon would acquire Whole Foods. For Amazon, the acquisition presented an opportunity to learn the ins-and-outs of running a brick-and-mortar grocery business without setting up a costly physical infrastructure or going through the usual trial and error. By the time Amazon rolled out its Amazon Fresh stores, the online behemoth had accumulated wide ranging industry knowledge through its Whole Foods operations. Amazon could also use the insights gained from analyzing Whole Foods consumer data to improve its online grocery offerings. And beyond groceries, Amazon could use Whole Foods’ extensive store fleet to improve Amazon’s physical footprint. 

The partnership seemed to be a natural match. While the sale of Whole Foods to Amazon signaled a turning point in the world of online groceries, the natural grocer was already experimenting with e-commerce and omnichannel before Amazon entered the picture. Whole Foods first announced the launch of a limited e-commerce platform in 1999 and partnered with instacart to offer delivery and in-store pick-up options back in 2014, when instacart was still a bona fide start-up. The Amazon deal empowered the grocer to take its technological capacities even further. 

At the time of the acquisition, Whole Foods was being pressured by investors to sell or make significant changes to the business model. The brand credited with transforming the natural and organic grocery space from niche to mass market was seeing increased competition from other grocers who had begun carrying organic and natural products at lower prices, and this competition was eating away at Whole Foods’ profits. But even if Whole Foods had somewhat tapered off, the natural grocery was still growing – until the pandemic hit in March 2020. 

Difficult COVID Recovery - But Recovery Nonetheless 

Visits to Whole Foods have not fully recovered from COVID’s impact, but are certainly on the rebound. A key element of this has been the brand’s orientation towards urban areas and a lesser orientation towards value shopping - two elements that have impacted visits in the current environment. 

Another part of the continued foot traffic decrease could be due to shoppers purchasing Whole Foods products through other channels. Amazon had already incorporated Whole Foods into its e-commerce machinery in October 2019 when it launched free grocery delivery for select prime members. And the internet giant subsequently announced that grocery delivery orders from Amazon Fresh and Whole Foods Market more than doubled in Q4 2019 on a year-over-year basis. And in October 2020, when it became apparent that the pandemic was not letting up, Amazon launched free, one-hour grocery pickup at all US Whole Foods Market locations. 

Beyond expanding customers’ digital access to Whole Foods, the partnership also created new opportunities for shoppers to visit Whole Foods locations, which may have boosted foot traffic during the pandemic-induced lull. In December ‘20, Amazon began offering customers the option of returning products purchased on Amazon.com to Whole Foods venues, with select stores now offering free “no-box” returns and return lockers to simplify the process even further. So far, however, these additional opportunities for physical visits have yet to translate into increased foot traffic, although the grocer has seen its YoY visits increase since the pandemic lows of 2020. 

Understanding Whole Foods through the Lens of Trader Joe’s

Trader Joe’s seems like the natural counterpart to Whole Foods – another national chain that brands itself as a health-conscious grocer that carries a variety of organic and natural foods. Unlike Whole Foods, however, Trader Joe’s is not publicly traded (nor is it owned by a publicly traded company). More importantly, Trader Joe’s does not operate its own e-commerce channel, emphasizing the in-store experience instead. While Trader Joe’s also suffered a pandemic-induced setback in visits, the California-based brand had returned to YoY visit growth by July 2020.

Comparing cross-shopping trends for the two brands – as measured by the number of one chain’s customers who also visited the other chain during a given timeframe – shows that Trader Joe’s seems to be slowly gaining on Whole Foods. In Q4 2017 – the first full quarter of Amazon’s Whole Foods ownership – 27.0% of Trader Joe’s customers visited a Whole Foods, while only 23.8% of Whole Foods customers visited a Trader Joe’s. By Q4 2021, only 25.3% of Trader Joe’s customers were cross-shopping at Whole Foods, whereas cross-shopping from Whole Foods to Trader Joe’s had grown to include 30.2% Whole Foods customers. Much of this centers arounds the continued challenges that Whole Foods has faced on a nationwide level, but also indicates that one potential beneficiary of those struggles could be Trade Joe’s. 

Customers Value Experience

In a survey we conducted in March 2022 of U.S. based adults aged 18 to 64, 29.4% of respondents stated that the in-store experience affected their choice of which grocery store to visit. For 18 to 24-year-old respondents, that share climbed to 44.4%. At the same time, only 38.3% of respondents (and 30.2% of 18 to 24-year-old respondents) stated that they were visiting grocery stores less frequently now than they had been pre-pandemic. This means that no matter how sophisticated a grocer’s online ordering, delivery, and pick-up mechanism is, most customers – including in key demographic segments – still want to visit physical grocery stores and have a positive shopping experience in the store. 

Comparing visits per square foot for nine Trader Joe’s/Whole Foods stores that are less than three miles apart from each other shows how much more crowded the Trader Joe’s tend to be. Part of the reason for the significantly higher visits-per-sq. ft. to Trader Joe’s stores is that Trader Joe’s stores are typically much smaller than Whole Foods stores. But another major reason is that Trader Joe’s has found a way to make shopping in its stores seem exciting, with the promise of being able to get certain products that are just not available elsewhere; customers are willing to brave the crowds in exchange for getting a taste of the unique Trader Joe’s experience. 

Amazon knew that the shopping experience was critical when it purchased Whole Foods in 2017. As Jeff Bezos, Amazon Founder and then CEO explained, “millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy.” Recently, Amazon has brought its “just walk out” checkout technology to Whole Foods, in an effort to increase ease and convenience. Will that be enough to bring customers back to Whole Foods? 

For more data-driven retail insights, visit our blog

Get 3 brand & industry
breakdowns every week

Subscribe to the newsletter

Great! Prepare your inbox for data-driven insights...
Oops! Something went wrong while submitting the form.

Get a Demo

Please enter your first name
Please enter your last name
Please provide a valid email
Please enter your email
Please enter company name

Thanks for reaching out!

One of our experts will be in touch soon

Try Placer.ai Free
Oops! Something went wrong while submitting the form.
It’s Showtime! Movie Theaters in the Spotlight
5 Limited Time Offers (LTOs) Driving Restaurant Traffic
Department Store Deep-Dive: Belk
Regional Grocery Chains Staying Ahead of the Competition
Five Chains that Rightsized for Success
Unlocking the Potential of Offline Retail Media Networks
Dining Out With Darden
What’s in Store for Self-Storage?
Nike + lululemon Update: Strong Performance Amid Expansion Plans
Many Ways to Win: Midwest Grocery Deep Dive
Retail, Reinvented: The Rise of the Pop-Up Shop
Navigating a New Normal in Business Travel & Commutes
Placer.ai Office Index: February 2023 Recap
Retail Categories Staying Strong in Volatile Environment
Ulta Beauty: Poised for Success into 2023
Placer.ai Mall Index February 2023: Reasons for Continued Optimism
Catching Up With DICK’s & Hibbett
The Miami-Dade Arena: An Advertising Slam Dunk
Car Washes Revving Up Visits
Tuesday Morning and Sunrises in Home Furnishing
Dining & Valentine’s Day Recap
2023: The Year of the Discount Store
Aldi’s Success Highlights Growing Demand for Value Groceries
5 Retail & Service Categories Holding onto Pandemic Gains in 2023
Visitor Insights from Super Bowl 2023
2023 First Look: Home Improvement Update
How Are Target, Walmart, and Wholesale Clubs Faring in 2023?
Department Store Deep-Dive: Nordstrom
Off-Price: Taking Off in Uncertain Times
Checking in On Middle-Class Hubs
Who Attends the Super Bowl?
Placer.ai Office Index: January 2023 Recap
Focusing On Fitness: Q4 and January Recap
Placer.ai Mall Index: January 2023 – Returning Mall Normalcy?
Location Intelligence Insights Into Concert Attendance
Winning Dining Strategies for 2023
In-N-Out Burger: What to Expect as the Brand Moves East
Location Intelligence Breakdown: Coffee Caps-Off 2022
Digitally Native Brands Lean Into Brick & Mortar
Washington, D.C. Population Changes & Migration Trends
A Location Intelligence Perspective on Macy’s Rightsizing
Amazon-Powered Shopping: The Future of Brick-and-Mortar Grocery?
Cold Weather, Hot Visits: Diving into Winter Resorts
Wawa and 7-Eleven: Leaning Into the “Slurpee Effect”
2022 and Beyond: Catching Up With McDonald’s & Chipotle
Let’s Have Some Fun! Going Out Is In
Placer.ai’s Q4 2022 Quarterly Index
Placer.ai Adds Industry Executives to Leadership Team To Drive Company's Next Phase of Growth
5 Emerging Retail Formats: 2023’s Brick-and-Mortar Evolution
Grocery Update: Zooming in on the Lone Star State
2022 Office Recap: The Year of the TGIF Work Week
What Lies Ahead for Brick-and-Mortar Luxury in 2023
Placer.ai Mall Indexes: December 2022 Recap
Looking Back on 2022’s Holiday Shopping Season
Post-Pandemic Migration Trends in New York
Top Retailers for 2023
The Live Sports Advertising Opportunity
Domestic Migration to the Mountain States: Small Shifts with Big Implications
New Year, New Food: 5 Dining Trends For 2023
Announcing Placer.ai’s COVID RECOVERY DASHBOARD
This is Why Shop-in-Shops Are Everywhere
Super Saturday 2022 Recap
The San Francisco Shift
Grocery Year-End Update: Publix in the Spotlight
Three Ways Retailers Can Think Small to Increase Store Impact
Offline Beauty Is on an Upswing
The Evolving Migration Patterns of New York’s Florida Snowbirds
Placer.ai Office Index: November 2022 Recap
How Viral Social Media Trends Can Drive Offline Engagement
Are You Ready for Some Football? Experiential Marketing Shows Promise
Mall and Shopping Center Trends For 2023
Retail Corridors and Indoor Malls: A Holiday Head-to-Head
Placer Bytes: Nike, lululemon, and GameStop Update
Placer.ai Mall Indexes: November 2022 Update
Black Friday 2022: Consumers Hear the Call
Digitally Native Brands: Taking Off, Offline
Discount and Dollar Stores Leading the Pack
Turkey Wednesday 2022
Retail’s Evolving Holiday Season
Placer Bytes: Starbucks and Department Stores Ahead of Black Friday
Ulta: A Force to be Reckoned With
College Towns Drive Dining Growth
Foot Traffic Trends Reveal Consumers Ready for Holiday Cheer
How Retailers Can Win Big By Going Small
How Are Consumers Feeling Ahead of Black Friday 2022?
Off-Price, Hibbett, and Dick’s Pre-Holiday Check-in
Ho, Ho, Wholesale: Costco, Sam’s Club, and BJ’s
October 2022’s Retail Rebound
Target and Walmart Ahead of the Holidays
Home Improvement: Leave it to the Pros
Despite Inflation, Holiday Season is Off to a Good Start
Placer.ai Office Index: October 2022 Recap
Placer.ai Mall Indexes- October 2022 Update
Americans Double Down on Fitness
The State of Grocery
CVS and Walgreens: The Wave Continues
Coffee Chains Brewing Up Visits
Placer.ai Spotlight: Pizza Players
What Drove COVID-Era Urban Migration Trends?
Kroger and Albertsons: A Merging of Strengths