Whole Foods is no longer unique
Tom Dougherty, CEO – Stealing Share
27 January 2016
The world has caught up with Whole Foods
Whole Foods is in trouble and, even worse, its complacency for its brand has caused it.
Since the end of 2013, Whole Foods stock has lost about half of its value. Once the darling of Wall Street, hipsters and the ever-increasing health conscious shopper, the organic foods chain’s brand is based on the simple promise of being America’s Healthiest Grocery Store. But in recent years, it has become complacent with its brand and failed to adapt to a changing market.
Whole Foods brought natural foods to the masses. It was (and still is) dedicated to bringing the most natural, organic and sustainable foods to its loyal customer base. As the desire for organic foods continued to rise, it grew at an exponential rate. Rising out of humble beginnings in Austin Texas in 1980, it now has 434 stores in the US, Canada and the UK.
The uniqueness of Whole Foods has disappeared.
For a long time, Whole Foods was nearly the only supermarket that sold organic and natural foods. When a direct competitor would pop up, it would simply acquire it.
Being the only chain that offered quality organic and natural foods, its was able to charge a premium for its products. So much so that its nickname is Whole Paycheck because of its prices. But even that did not deter consumers.
The problem is that Whole Foods failed to understand that its model could be duplicated. Naturally, as the desire for organic and natural foods continued to grow, supermarkets latched on to the trend and started to offer the same kinds of organic and natural products.
Very few people can afford to do all of their grocery shopping at Whole Foods. So, as they trickle into their local grocery store to pick up laundry detergent or toilet paper, they gradually began to see more and more organic and natural foods on the shelves and in the produce section.
And guess what? It was less expensive and, low and behold, tasted pretty much the same as what they were getting at Whole Foods. This trend has risen to the point where it is not the largest seller of organic foods anymore. Costco is.
What Whole Foods continues to not understand is that it is not in the organic food business. It is in the supermarket business. I say this because in today’s retail food market, in order to be a supermarket you HAVE to carry organic and natural foods. The public demands it and having organic foods is a table stake. Even Walmart is selling organic foods in its grocery departments.
Whole Foods believes it still can get a premium price for its organic and natural foods that can be purchased at any supermarket now, simply because Whole Foods is selling it. In essence, it thinks that consumers will pay more for its brand. While that might have been true a few years ago, its recent sales and stock performance demonstrate that it is not the case any longer.
Whole Foods has failed to give consumers a reason to continue to use it in a market in which competitors are selling like products at lower prices.
I am sure Whole Foods would say that its organic and natural products are better than those you can by at your local supermarket or Costco. But experience with its own customers is proving otherwise.
In order for Whole Foods to survive, it will have to modify its model and bring its pricing more in line with the rest of the market – and even that may not be enough.
Whole Foods must utilize what little brand clout it has left and find a way to reconnect with its once loyal customer base and also reach out to new customers. And this can only be done with its brand.
Taco Bell Cantina Tom Dougherty, CEO - Stealing Share 26 September 2017 Taco Bell Cantina depends on its meaning I have never nor will ever taste a morsel of anything from a Taco Bell menu. Mystery meats come to mind first, a disgruntled employee peeing in nachos does...
The NFL Protests Tom Dougherty, CEO - Stealing Share 25 September 2017 NFL protests. The stakes are high. The NFL protests may be a danger to the US itself. What on earth is going on? Do you disagree with the NFL protests by many of the players? The ones where NFL...
Go Boldly Tom Dougherty, CEO - Stealing Share 21 September 2017 Go Boldly American Biopharmaceutical Companies Go Boldly, the marketing arm of the American Biopharmaceutical Companies, has launched a new TV campaign. It is perfect branding? It just might be. The key...