Permalinks for WooCommerce Categories and Subcategories

I was able to resolve this with the following code which generates rewrite_rules for each subcategory, which is preferred during matching since it’s more specific:

function wpse_291143_generate_taxonomy_rewrite_rules( $wp_rewrite ) {

    global $wp_rewrite;
    $base = "shop";

    $rules = array();
    $terms = get_terms( array( 'taxonomy' => 'product_cat', 'hide_empty' => false ));

    foreach($terms as $term) {
        $term_children = get_terms( array(
            'taxonomy' => 'product_cat',
            'parent' => intval($term->term_id),
            'hide_empty' => false
            )
        );
        if($term_children) {
            foreach ( $term_children as $term_child ) {
                $rules[$base . "https://wordpress.stackexchange.com/" . $term->slug . "https://wordpress.stackexchange.com/" . $term_child->slug . '/?$'] = 'index.php?product_cat=" . $term_child->slug;
            }
        }
    }

    $wp_rewrite->rules = $rules + $wp_rewrite->rules;
    return $wp_rewrite->rules;
}

add_action("generate_rewrite_rules', 'wpse_291143_generate_taxonomy_rewrite_rules');