Trader Joe's could lose more customers than any other store to Amazon-Whole Foods
- Trader Joe’s is the retailer most at risk of losing customers to Whole Foods and Amazon, according to data from research firm Magid, cited by Food Navigator. This is because Trader Joe's customers "cross shop" at both Whole Foods and Amazon at more than three times the industry average.
- Recent data from location firm Thasos shows that Trader Joe’s saw the highest rate of defection (10%) during Whole Foods' first week under Amazon.
- “I would imagine that many Trader Joe’s consumers were once Whole Foods consumers who migrated due to pricing or convenience,” Matt Sargent, senior vice president of retail at Magid, told Food Navigator.
With its cult status, intense customer loyalty and some of the highest foot traffic in the industry, Trader Joe’s is the envy of retailers throughout the industry. But could the one-of-a-kind grocer lose a significant amount of business to Whole Foods and Amazon?
The defection numbers from Magid, which according to the firm remained elevated through mid-September, aren’t encouraging. Although research has shown that foot traffic to Whole Foods has dropped in recent weeks, it still shows the retailer’s ability to draw Trader Joe’s customers.
So what might cause those consumers to shift more of their shopping to Whole Foods long-term? Price seems to be a key determining factor. Trader Joe’s offers low-priced private label brands, but Amazon seems poised to lower the Whole Foods' prices overall. Still, research has shown that its opening discounts didn’t have much of an impact on stores’ average prices.
Whole Foods' premium product assortment could be another lure. Both retailers are known for their selection of unique products, with Trader Joe’s boasting the more eccentric, experience-focused lineup compared to Whole Foods’ many values-driven brands. The grocers have also built considerable customer loyalty around their unique products, but this could potentially erode for Whole Foods under its increasingly centralized buying structure. According to reports, and to industry sources recently interviewed by Food Dive, Whole Foods is focusing more on brands with scale and less on emerging brands. Consumers could be turned off by this move, which could actually keep Trader Joe's shoppers from defecting — if they're willing to pony up more for more niche brands.
Trader Joe’s seems to have some significant advantages over Whole Foods right now, but that could change as Amazon continues to drop prices, increase its e-commerce offerings and rolls out its Prime loyalty offerings. At the same time, if Amazon and Whole Foods can’t measure up on product assortment, Trader Joe’s may not be under that much of a threat.
- FoodNavigator-USA.com Trader Joe's is most at-risk from Whole Foods/Amazon: Magid expert
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