Whole Foods price cuts hit hardest at Trader Joe's, Sprouts: study

LOS ANGELES (Reuters) - Trader Joe's and Sprouts Farmers Market Inc have been hit hardest by customer defections since Inc AMZN.O 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, a move widely expected to upend the food retail business.

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 Corp TGT.N saw 3 percent of customers visit Whole Foods while Costco Wholesale Corp COST.O 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 Stores Inc WMT.N and Kroger Co KR.N, the leading U.S. grocery sellers with millions of customers.

Wal-Mart accounted for 24 percent of Whole Foods’ new customers and Kroger 16 percent, from Aug. 28 through Sept. 3. During that period, 15 percent of shoppers came from Costco, 11 percent were from Target and 5 percent were from Wal-Mart’s Sam’s Club.

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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 gamechanger in the grocery space,” Skibiski said.

Orbital Insight, which monitors business at about 65 percent of Whole Foods locations, reported a 5 percent year-over-year increase in car traffic to Whole Foods stores in the month since the acquisition closed.

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.

Shares in Amazon fell 0.3 percent on Tuesday. Target and Sprouts were also down slightly. Shares of Wal-Mart, Kroger and Costco were up modestly.

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