Last week, news broke that Whole Foods is being acquired by Amazon, a company that continues to extend its reach far beyond the internet bookstore that now stands in the shadows of their multi-faceted empire.
Since Amazon is an e-commerce company that sits on a mountain of its own 1st party consumer purchase data, it’s difficult for other companies to get an inside-look at Amazon customers. The ability for an external party like Amazon to get insight into Whole Food customers (and how they compare to other grocery shoppers) is equally as challenging.
So, who really are these kale-loving, high-end shopping, grocery gurus? And can they fit within Amazon’s grand plans?
That’s where location intelligence comes in. We analyzed the aggregate and anonymized visitation patterns of Whole Foods shoppers against their competitors to better understand who these audiences are based on their real-world experiences, how to best market to them, and what shopping habits they display beyond Whole Foods. In our metrics below, we also analyzed Kroger customers and Trader Joe’s customers to serve as benchmarks for comparing Whole Foods to other grocers.
In short — we think Amazon got a deal with massive growth potential. Check out some of our findings below:
Whole Foods Shoppers are Well-Off and Urban.
Of course. You know this, we know this, but it’s worth quantifying and understanding.
Whole Foods Consumers Make More Than the Average Consumer.
These shoppers are making conscious decisions to put their higher income towards pricier food. This tells us they value health and/or premium products, and will pay the price or budget accordingly in order to keep up with the lifestyle they want.
Whole Foods Consumers are Younger Than the Average Grocery Store Consumer.
Shoppers not only skew younger than the shoppers of competitive stores, they also tend to live in apartments, and are more likely to be couples than roommates.
Amazon bought a grocery store AND a lunch restaurant.
Whole Foods is seen as a “grab-and-go” spot for lunch or dinner, versus a place to fill a week’s worth of groceries for a family of five. We analyzed the time of day each grocer sees the majority of their overall daily traffic — Whole Foods receives 12% more traffic during lunch than any other time of the day. Kroger, on the other hand, sees their spike after work around 5PM when people are shopping for family dinner, or restocking for the rest of the week.
Whole Foods’ changing role throughout the day is especially valuable to Amazon. They’re able to address two different customer occasions within a single location.
People invest time (as well as money) to shop at Whole Foods.
Whole Foods shoppers are willing to travel the farthest — an average of 5.51 miles! When compared to a Kroger, customers opt for convenience, and only travel an average of 3.4 miles. Neighborhood grocers — like Kroger, Safeway, or Food Lion – are exactly that; they are generally chosen because they’re close and convenient. Whole Foods, on the other hand, has a unique offering and experience for which their customers will drive further (and pay more money for).
Almost all Whole Foods shoppers shop at other grocers, too.
It is extremely beneficial to understand why consumers are shopping at certain grocery chains or specific locations. Is it a one-stop-shop for all their grocery needs, or is it only to pick up select items? When we look at shopper loyalty, Kroger shoppers are 58% likely to return on a weekly basis, while Whole Foods shoppers are only 10% likely. This tells us that although shoppers are willing to travel farther to a Whole Foods, it is for select items and many times on a one-off basis.
Conclusion: Whole Foods represents a massive opportunity for Amazon.
Let’s recap what we’ve learned using location intelligence:
- Whole Foods shoppers are well off and urban
- Whole Foods is a grocery store and a lunch restaurant
- Customers invest travel time as well as money to shop at Whole Foods
- Whole Foods shoppers shop at other grocers
Amazon has addressed its weaknesses in perishable goods by picking up a retailer with an affluent customer base, that serves a multifunction role for its customers, and commands time as well as monetary investment. But the most worrying aspect of this deal for competitive grocers is the last bullet: many of their customers currently shop at other grocery stores. If Amazon brings its standard aggressive pricing to Whole Foods, they might convert the store from an occasional destination to a weekly routine. The discrepancy between Whole Food’s 10% weekly-shopper rate and Kroger’s score of 58% suggests there is massive upside to capture with aggressive pricing and last-mile delivery, removing the price and time barriers between customers and Whole Foods.
To make a mark on the grocery industry, Amazon doesn’t have to win new customers; it just has to better optimize the ones Whole Foods already has.
Big companies like Amazon understand their consumers’ interests better than anyone else, but when it comes to understanding what customer audiences are doing offline many companies turn to location intelligence. This industry is revolutionizing how brands understand and market to their consumers. Before clicks and Web browser history were physical consumer footprints — the most telling insights brands had into a consumer’s visit profile. Now, with location technology, brands can market the right message to the right person at the right time, based on where they are.