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Who is Stealing Customers from Whole Foods?

After a decade of explosive expansion, Whole Foods Markets has recently been stagnating. According to a report, as major grocers like Wal-Mart and Kroger ramp up their organic produce offerings and new competitors like ALDI and Lidl are entering the market, Whole Foods is losing customers.

We looked at our panel of transactions from over 3 million payment cards to detect which grocers are capturing customers who abandon Whole Foods.

We decided to look at the group of consumers who spent a significant amount (at least $300) at Whole Foods in the first half of 2016 and then spent much less ($100 or less) at Whole Foods in the second half of 2016.

We then calculated, for the above group of consumers, the difference between their spend at other major grocers in the first and second halves of 2016 and ranked those by the difference.

Here are the companies that were atop the list, growing the most among customers who abandoned Whole Foods:

ALDI, the low price point, no-frills European chain that recently expanded its organic food offering is at the top of the list.
Even more interesting - some larger and more traditional chains grew very significantly among Whole Foods defectors: Meijer (13.4%) and Wegmans (11.7%), followed by Royal Farms (10.5%) and Hannaford Brothers (9.9%) all show significant gains within this customer cohort.

We also looked at the cohort of consumers who continued shopping at Whole Foods consistently across 2016 (over $200 spent in both the first and second halves of the year) to find grocers that grew the most, capturing some of Whole Foods' "lost" potential growth:

Here we find some of the same companies as in the previous chart, along with Albertsons (25.8%), Food Lion (14.2%) and Kroger (8.9%) that also made significant strides in capturing some of the Whole Foods customers' wallets.

It seems that traditional grocers' investments in their own organic food brands are paying off, capturing market share away from the pioneer - Whole Foods.

We will follow this story to see whether Whole Foods can find the right strategy to compete in the new landscape, where its competitors are mastering its own game.

Learn more about consumer spending analytics with TXN.

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