Dive Brief:

• Amazon Fresh locations that have been open for at least eight months are showing steady foot traffic indicating a “core group of customers” have integrated the stores into their grocery shopping routines, according to a report from Placer.ai.
• Cross-shopping data shows that Amazon Fresh competes heavily with conventional grocers like Jewel-Osco and Ralphs. Customers also frequently shop at Trader Joe’s and Whole Foods.
• The data from Placer indicates that Amazon Fresh is so far having success gaining share of wallet from other grocery chains as it seeks greater purchase frequency from Prime members.

Dive Insight:

More than a year after Amazon Fresh opened its first location in Woodland Hills, California, Placer’s data offers a comprehensive view at foot traffic across several locations that opened around that same time.

The results, which depict traffic relative to a baseline across eight locations between March and September of this year, show a relative steadiness over the period that implies the stores are seeing regular, repeat visits from shoppers. Two locations that opened in February — one in Fullerton, California, and another in Oak Lawn, Illinois — show an expected drop in traffic, which is common to new locations, between March and April, but then stemmed that decline by May. Traffic at the Oak Lawn store actually rose from 4.1% above the baseline in April to 32.6% above in September.

“The relative steadiness in visits shows that a core group of customers have added a trip to Amazon Fresh to their regular grocery routine, indicating that Amazon Fresh has successfully integrated into the grocery mix for the neighborhoods it entered,” according to a blog post on Placer’s site.

The stores' traffic may also be benefiting from the overall rise in grocery visits in the second and third quarters of this year as consumers received COVID-19 vaccinations. According to Placer's grocery index for 2021, store traffic rose in Q2 and Q3 compared to last year after declining in Q1.

To see where Amazon Fresh is siphoning customers from, the firm looked at a cross-section of other visited stores by shoppers to four of Amazon Fresh’s earliest locations — in Woodland Hills, Irvine and Northridge, California; and a location in Naperville, Illinois. The results show that conventional stores are, unsurprisingly, their main competitors. More than 44% of shoppers at the Amazon Fresh store in Naperville had also shopped at Albertsons-owned Jewel-Osco in September.

What’s a bit more surprising is that Trader Joe’s was a common destination for people who shopped at the Amazon Fresh stores in California. This may mean Amazon Fresh stores are, as Placer notes, resonating with price-conscious shoppers. 

"It seems that the core market is not the same as the one Amazon gained by acquiring Whole Foods and instead seems to be more oriented towards value and convenience," Ethan Chernofsky, vice president of marketing for Placer, wrote in an email.

There was some crossover traffic with Amazon-owned Whole Foods. Some of that is to be expected, said Chernofsky, and indicates Amazon Fresh stores are also able to reach specialty shoppers.

Taken altogether, the data seems to show that Amazon is off to a promising start in its push to establish a mainstream grocery chain. 

"While the Whole Foods acquisition drove major headlines, it appears that Amazon’s grocery evolution will center more largely around a value oriented push with Amazon Fresh," according to Placer's report. "This would play directly into Amazon’s wider strength in distribution and convenience oriented efficiency as opposed to a higher end approach that would emphasize quality and a different type of in-store experience."

Things could improve further as the company continues to flex its muscles in online shopping and in-store technology. While Whole Foods now charges a $10 fee for all online orders, delivery and pickup from Amazon Fresh are still free of charge for Prime members. A Business Insider report, meanwhile, notes that Amazon plans to add Just Walk Out technology to all of its Fresh locations over time.

That same report, however, noted that Amazon has fallen significantly behind schedule in rolling out these stores. The story, which referenced internal documents, said the company expects technology costs for its frictionless checkout system to drop by 75% between 2020 and 2023. Amazon Fresh currently has 19 stores across six states and Washington, D.C., according to its website.