Dive Brief:

• Trader Joe’s seems to be winning at attracting more natural and organic food shoppers into their doors, a recent Research and Markets report finds. According to the data, 10.5% of the nation’s adults shop at Trader Joe’s at least once a month, while 6.3% take a monthly shopping trip to Whole Foods.

• According to the report, Trader Joe's posted a 10-year compound annual growth rate in customer base of 5.9%, compared with 4.9% for Whole Foods.

• Even as Trader Joe’s and Whole Foods have battled against each other for market share in the natural grocery channel, their biggest competition in the sector in the future may come from conventional supermarkets, superstores and discount grocery shops offering a growing number of natural and organic food options, the report says.

Dive Insight:

Consumer expectation has placed pressure on all grocery stores to offer natural and organic food options, leading to expanded product lines at conventional supermarkets as well as supercenters like Walmart and hard discounters like Aldi. These growing expectations offer more consumer choices, but they make Whole Foods' once distinctive product offerings less unique. 

Despite the increasing number of choices, there still is plenty of room for growth in this marketplace, because “the natural channel remains a fragment of food retailing overall,” Research and Markets said in the recent report.

To meet consumer demand and gain some of this untapped market share, Whole Foods has been trying to shed its “whole paycheck” image. The natural and organic grocer's takeover by Amazon has been helpful on this front. offering an immediate price drop after the deal closed in August. Whole Foods has continued to offer more discounts and steeper price cuts on organic foods during the 2017 holiday season, though reports say some prices have been creeping up.

Soon after the Amazon-Whole Foods deal closed, data from Thasos indicated 10% of regular Trader Joe's shoppers had gone to Whole Foods in the first week of the merged business. Analysts from Magid said at the time that Trader Joe's might have more to lose in the Amazon-Whole Foods tie-up than any other retailer, especially since many Trader Joe's customers may have once been dedicated Whole Foods shoppers and Trader Joe's shoppers go to both stores more than three times as often as other stores' loyalists.

With items like riced cauliflower stuffing and fire roasted tomato cranberry salsa on their shelves this fall and a reputation for cheaper prices, Trader Joe’s appears to be relying on its unique product line and its commitment to product safety as the competitive advantage against its main rival and the mainstream and discount grocers now entering the natural foods space.  

“With more than five decades of experience working directly with the producers of our products, we stand by our proactive practices and are continually improving our safety processes," an entry on the company's blog states. "We take these matters seriously—personally, even, as our families eat, drink, and use TJ's products, too.”

While prices, selection and philosophy may be doing more to bring shoppers to Trader Joe's now, the battle is far from over. In the long term, both retailers will have to enhance e-commerce options — a place where Whole Foods has a significant advantage. By 2021, food and beverage sales will grow to $930 billion, and online sales will account for 8% of sales, or $70 billion, according to Inmar Willard Bishop Analytics.

“When shopping a retailer that offers e-commerce, households that shop online and in-store spend 29% more than households shopping in-store only,” Inmar Willard Bishop Analytics reported in its eCommerce Superstudy.

Trader Joe's has also signaled a much less aggressive strategy on store expansion, opening fewer stores in the last year than usual. This may signal a wait-and-see attitude toward Whole Foods' future moves -- or just caution on the retailer's part. Whatever the reason, it will take time to see how shoppers' patterns ultimately change because of the Amazon-Whole Foods deal. Trader Joe's may be smart to slowly start winning back shoppers on its own merits before making expensive moves into new stores and new markets.