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

Whole Foods is no longer unique.

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.

See more posts in the following related categories: Organic foods Whole Foods Whole Foods brand

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