Whole Foods' New Price Cuts Are Hurting Trader Joe's

Looks like Whole Foods’ new lower prices are paying off, but not for Trader Joe’s.

Trader Joe’s and Sprouts Farmers Market have been hit hardest by customer defections since Amazon cut prices at Whole Foods, a data analytics firm said on Tuesday.

Amazon slashed prices on select items at Whole Foods on Aug. 28, the day the world’s largest online retailer closed its $13.7 billion purchase of the premium grocer.

On that day, Whole Foods’ customer traffic spiked 31 percent from a year earlier, according to a Thasos Group analysis of location data from millions of mobile phone users.

Traffic was up 17 percent during the full week after the price reductions and remained up 4 percent for the following week, ended Sept. 16.

According to the Thasos data, 10 percent of Trader Joe’s regular customers visited Whole Foods between Aug. 28 and Sept. 3, more than any other competing chain, followed by Sprouts, with 8 percent. Target saw 3 percent of customers visit Whole Foods while Costco and Safeway both saw 2 percent.

Although Trader Joe’s and Sprouts saw the greatest percentage of their customers visit Whole Foods, the biggest losers in terms of actual shoppers were Wal-Mart and Kroger, the leading U.S. grocery sellers with millions of customers.

The price reductions did not attract customers outside Whole Foods’ traditional upper-income demographic. They also did not convince consumers to drive longer distances to shop at Whole Foods, said Thasos Group Chief Executive Greg Skibiski, who added that the data used for the Whole Foods competitive analysis includes 10 percent of the U.S. population.

“Amazon’s acquisition of Whole Foods has the potential to be a game changer in the grocery space,” Skibiski said.

Foursquare, which analyzed the mobile phone movements of more than 2.5 million Americans, said traffic to Whole Foods was up about 13 percent the first week after the price cuts and remained up 8 percent after the second week.

Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio and Bill Rigby