Whole Foods feels the e-commerce sting

Whole Foods has had an edge in e-commerce and omnichannel, but it may be a victim of its own success.

Why it matters: Throughout the pandemic, Amazon has made it easier for Whole Foods customers to buy groceries online. Now that the economy has reopened, it's seen a decline in traffic growth from customers returning to its stores, according to retail foot traffic analytics firm Placer.ai.

• Shoppers value localized products and a unique customer experience when they go to stores, two things they're getting less of at Whole Foods, Placer.ai's head of analytical research R.J. Hottovy says.

Catch up fast: Whole Foods is nearing the five-year anniversary of its combination with Amazon.

• The relationship has been symbiotic. Amazon has tapped into the insights gleaned from Whole Foods stores to improve its own online grocery offerings and its physical footprint.
• Whole Foods has gained the technological prowess to become an e-commerce player.

Our thought bubble: When Amazon bought Whole Foods, it had no way of factoring in a pandemic. It rose to the occasion with an upgraded online experience, but it didn't do the same with its physical stores.

The bottom line: Amazon has for the most part succeeded in creating a seamless experience between online and its physical stores but it has come at a cost — customers are rubbing shoulders with online order fulfillment employees on the aisles, lessening the allure of the Whole Foods experience.

• Amazon and Whole Foods "really haven't separated their e-commerce business from their in-store business," Hottovy says.
• "A lot of grocery chains have moved their online fulfillment to other channels and so they're not putting workers in direct competition with their customers," he adds.