From the New York Times:
Whole Foods Market is on a mission to revise its gold-plated image as consumers pull back on discretionary spending in a troubled economy. The company was once a Wall Street darling, but its sales growth was cooling even before the economy turned. Since peaking at the beginning of 2006, its stock has dropped more than 70 percent.
Now, in a sign of the times, the company is offering deeper discounts, adding lower-priced store brands and emphasizing value in its advertising. It is even inviting customers to show up for budget-focused store tours like those led by Mr. Hebb, a Whole Foods employee.
But the budget claims are no easy sell at a store that long ago earned the nickname Whole Paycheck. Told of the company’s budget pitch by a reporter, some Whole Foods customers said they had not noticed cheaper prices; a few laughed.
The article also says that consumer interest in organic products isn’t increasing the way it used to. Organic or not, a $32.99 pound of pine nuts just isn’t cutting it for most people.
What’s Whole Paycheck doing to entice America’s increasingly large penny-pinching contingent?
–Piling weekly sales flyers near store entrances.
–Putting up more sale signs to entice customers towards the chain’s competitive-priced items, which include eggs and domestic cheese.
If Whole Foods wants to retain its sprawling store sizes and consumer base, it needs to do more than just put up a few sales signs. A frequent shopper program with weekly discounts would keep doubtful consumers coming back. Expanding on their somewhat affordable restaurant section while removing organic items that people just don’t buy in recessions (for example, the NYT article said that people stray away from organic crackers) would help them keep the lunchtime working crowd.
Or they could become an ultra-high-end mini-grocer catering to the people who actually do buy cheese that costs more than $40/pound…
Bottom Line: Whole Foods, you need to do much, much more to keep shoppers around.