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What 'mission-driven' buying means for grocers like Amazon's Whole Foods, Kroger, and more

Brooke DiPalma
·Associate Producer
·3-min read

It was a tough end of 2020 for Whole Foods Market, which may be falling victim to COVID-19 trends that have made consumers more choosy about where — and how — they shop for food.

According to data Intelligence platform Placer.ai, physical visits to the grocery chain owned by Amazon (AMZN) were down 18.7 percent from a year prior. Despite Whole Foods’ reputation as a high-priced hub for all foods organic and artisanal, it now seems as if “their strengths have now been turned against them,” Ethan Chernofsky, CMO at Placer.ai, told Yahoo Finance.

In fact, the data suggests that Whole Foods is defying one of the COVID-19 era’s most powerful trends: home-bound consumers cooking at home — and flocking to the grocery store in order to do so.

Amazon doesn’t break out Whole Foods as a category on its balance sheet, but the retailer’s online grocery sales surged last year in the wake of widespread COVID-19 lockdowns. However, like many other brick-and-mortar establishments, the grocer’s foot traffic has been on the decline — and some of it may be tied to the mass departure of middle-and upper-income earners from high priced cities.

In an uncertain time, the high-priced grocer is “very oriented towards urban environments and cities and there's been this exodus from cities,” Chernofsky said.

“If you created a scenario in a lab that would be difficult for Whole Foods, you create this,” the analyst said, even as he cautioned the current trend was likely more short-term than permanent.

More ‘mission-driven’ grocery buying

(Courtesy: Placer.ai)
(Courtesy: Placer.ai)

Still, Whole Foods’ foot traffic has appeared to underperform in the current environment, even when compared to other grocery chains, according to Placer.ai data.

In fact, the firm noted that visits at more regional grocery stores are all up year-over-year at places such as ACME Markets (up 23.8%), Aldi (+8.2%), and Albertsons (ACI), up 4.7%. And when compared to a year ago, shoppers are spending more time at most of those grocers.

As Americans await the new administration’s planned $1.9 trillion dollar stimulus package amid the ongoing coronavirus pandemic, Placer.ai predicts retailers, home improvement stores and traditional grocers like Kroger (KR) and Publix will see “exceptional 2021 performances.”

The latter represent food stores “that you can go in and get everything you need in a single place and they're high quality, but usually high value with an orientation towards value.”

According to the analyst, consumers are eyeing “mission-driven shopping” — a retail strategy that shoppers used during COVID-19, and is expected to continue into 2021. This essentially means consumers are spending more time at grocers with the mindset of “‘I'm trying to accomplish more with each visit,’” according to Chernofsky.

(Courtesy: Placer.Ai)
(Courtesy: Placer.Ai)

In the past while consumers used to make various stops to a local fruit bodega perhaps, a butcher shop, or their local bakery, they are now consolidating all those little trips into one. Chernofsky believes this lure to the ‘one-stop shop’ is here to stay for a while — a category that Whole Foods certainly fits.

“When economic times are hard, people look to save money and one of the best ways to save money is to pass over a dinner out and instead to do a home cooked meal,” he stated.

“Grocery has this unique combination of advantages heading into 2021 that could make the sector do even better this year than they did last year,” he added.

Year-over-year, shares of Kohl’s are up more than 7%, At Home Group up 268.72%, TJX up 7.18%, Tractor Supply Company up 61.94%, Dollar General up 29.93%, Albertsons up 12/1% and Kroger up 19.4%.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.

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