It was by no means high on the list of disappointments in 2020, but I was still bummed that I couldn’t visit Amazon’s first Fresh grocery store in Woodland Hills, CA when it soft launched in August of this year.
It was Amazon’s first full, physical supermarket (the company had opened smaller scale Go Grocery stores before) and excitement was high. What types of Amazon-type technology would Jeff Bezos bring to the grocery sector?
Evidently a lot of people were keen on checking out Amazon, Fresh, according to data released this week from Placer.ai, a company that uses mobile phone location data to gather and analyze foot traffic to real world retail locations.
According to Placer, Amazon Fresh saw a surge of customers in the first weeks it opened to the public in September. In a blog post this week, outlining its findings, Placer wrote:
The first week saw visits on par with two local players with very strong visits rates, Trader Joe’s and Ralphs. But, Amazon Fresh quickly burst ahead with four of the next five weeks seeing the location drive over 5,000 more visits per week than either of those two competitors.
Amazon Fresh was also getting roughly the same number of visits per visitor as comparable grocers. Ralph’s and Trader Joe’s were seeing 2.4 and 2.2 visits per visitor respectively, while the new Amazon Fresh was already seeing 2 visits per visitor, indicating that people were having a good enough experience at Fresh to come back.
Placer reports that one of the reasons Amazon Fresh enjoyed so much foot traffic is because of the store’s “True Trade Area.” When picking a location for a store, a grocer might consider its main customer base to be within a straight five-mile radius of that store. But Placer’s data gathering shows that this strict geographic limitation isn’t accurate, and that a store’s shopping base can actually come from further out. This expanded reach is what Placer calls the True Trade Area.
As you can see from this map, Amazon Fresh Woodland Hills’ True Trade area actually covers a large swath around Los Angeles, so it was pulling customers from outside of Woodland Hills.
I was curious about some of Placer’s findings, so I spoke with Ethan Chernofsky, Placer.ai’s VP of Marketing (and author of the Amazon blog post), by phone this week. My first question was whether some of Fresh’s sizeable foot traffic could be attributable to curbside pickup. Amazon.com’s customer base it so huge, perhaps people were just ordering groceries online and picking them up at the Fresh store, even if that meant driving to another part of town. But Chernofsky said that was unlikely, given the length of time people were staying at the Fresh location.
But while Amazon Fresh enjoyed an early boom in foot traffic, starting in October, Amazon Fresh saw its numbers fall. As the Chernofsky detailed his analysis “Between October and November, the Amazon Fresh True Trade Area decreased by 27.1%, just as monthly visits declined 27.6%. On the other hand, Ralphs saw visits rise 13.7% as its own True Trade Area declined by 7.1%.”
One explanation for the drop could be that the excitement wore off, and what was once shiny and new was no longer shiny and new. Chernofsky doesn’t think that’s it though. As he wrote in a corporate blog post “the close relationship between visits per visitor metrics between the top local grocers indicates that this location was actually succeeding in driving repeat visits even among the launch buzz.”
Instead, Chernofsky attributed the drop to the COVID resurgence in Los Angeles this fall. As the virus reemerged, travel and work was limited, so there was less cross shopping, or tacking on a visit to the grocery store during an errand.
Another factor could be the fact that Amazon added three additional Fresh locations in Los Angeles since the opening of the first Woodland Hills location. The Northridge and North Hollywood locations both opened in mid-November and seem like they would draw from the same pool of customers as the Woodland Hills location’s True Trade Area.
Regardless, data like that from Placer is worth looking at to see how well Amazon is doing as it starts its forays into real world grocery. I’m still looking forward to a time when I can see the Amazon Fresh stores in person.