I was right, Whole Foods has lost its way. I wrote a blog a couple of weeks ago where I made an argument that Whole Foods had lost a lot of its uniqueness because competitors were selling like products at lower costs. As a result, its stock price has nearly been halved over the past 12 months.
Now, Whole Foods is opening up a sub brand, 365 Whole Foods Market, which is “a smaller more curated selection at excellent price points” according to CEO Walter Robb. While a sub-brand in and of itself is not obvious problem, Whole Foods, which is under extreme competitive pressures where its same store sales and margins are down, it represents an all to common move to diversify rather than solidify.
365 Whole Foods is a non-starter.
Whole Foods as a brand needs to work on its main brand not divide it. Not only does the 365 Whole Foods Market concept represent drift from its main brand, it is confusing and appears as though it could actually compete with other Whole Foods markets. Further, 365 Whole Foods Markets hints at including some services that go way beyond the traditional grocery store concept like record stores and tattoo parlors.
Neither of which have anything to do with the traditional Whole Foods brand.
History is filled with companies that try to fix a problem by creating new ones. What Whole Foods does not understand is that its problem is not the lack of a sub-brand. Its problem is that the execution of its brand has not changed as market conditions have. Being first mover does not always guarantee success, especially over the long haul and certainly not when the brand fails to adapt.
For Whole Foods, 365 Whole Foods will do nothing to fix its brand.