Whole Foods + Amazon: What are the Initial Implications?

Amazon’s acquisition of Whole Foods has officially closed, and they wasted no time making good on their promises to lower prices. But this was only the first week – what are the greater implications of this acquisition?

Since InfoScout is in a unique position to know what the individual shopper is doing both on Amazon and at Whole Foods (and can survey these same shoppers), we decided to dig into the data to understand the initial impact on the U.S. grocery industry.

Prime Members + Whole Foods Shoppers

Currently, approximately 23% of Prime members are already Whole Foods shoppers, leaving plenty of opportunity for Amazon to convert the remaining 77% of Prime members to start shopping at Whole Foods.

On average, Prime members are in their mid 30s/40s, high income, educated, and part of 2-person households. But looking at the Prime members who are also Whole Foods shoppers, we see these numbers amplified. These shoppers skew slightly younger (20s/30s), but have even higher incomes, are more likely to be college educated, and more likely to come from smaller households.

How will this change shopper behavior?

Since Whole Foods and Prime both attract higher income shoppers, these valuable shoppers may shift their spend away from other grocery retailers to Whole Foods. And as Amazon/Whole Foods continue to lower prices and offer better deals, they may be in a position to attract more diverse shoppers than in the past.

Which categories will lead changes in behavior?

Whole Foods gives Amazon an opportunity to win in fresh produce – which may negate the need for shoppers to make additional trips to other grocery retailers and shop other categories while they’re in the store. And if produce no longer brings shoppers into the stores, will these same shoppers move online for packaged goods, simply out of convenience?

Which retailers will be impacted first?

Walmart, Kroger, and Costco currently win the Prime + Whole Foods shopper’s grocery spend, but Costco currently leads the categories where Amazon/Whole Foods is slashing prices. If more shoppers are motivated to join Prime, then Walmart and Target could be particularly impacted. Over the coming months, we will be able to see whether shoppers actually switch retailers or just shift their spend on key categories.

According to Amazon’s own press release, “We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.” InfoScout will be watching closely to see how this plays out, and how it impacts the grocery landscape.