Why Whole Foods Plans to Become Smaller and Cheaper
Whole Foods has to be keenly aware of its unbecoming nickname, “Whole Paycheck“, among much of the population. As a grocery store chain specializing in healthy, sustainable, natural food and products, Whole Foods has been lauded by many as one of the few companies pushing a progressive new way to think about consumption. But the company’s stores have also been available to only certain segments of the population, in some respects, by having higher-than-average prices and by restricting the geographic locations of its stores.
The company must be paying attention, because Whole Foods’ leadership is daring to do something about it. The company’s new plan is to address exactly the biggest complaint against it, and in the process, win over younger shoppers.
Step one? Become more affordable.
In order to do so, the company has plans to open an alternative chain of stores compared to its traditional locations, which will naturally target and court the most tempting of all consumer demographics — millennials. According to a report from the Associated Press, the focus of these stores will be lower prices on goods, which is what Whole Foods considers to be its biggest hurdle in mounting an effective expansion strategy. Millennials, of course, are the generation that so many businesses are now catering toward, but they’re also a generation mired with economic strife.
Needless to say, it’s hard for many to justify an inflated grocery budget just to shop at a place like Whole Foods. Speaking with AP reporters, Whole Foods co-CEO Walter Robb said the new, cheaper stores will boast a “modern, streamlined design, innovative technology and a curated selection.” As for when Robb wants to get the new project off the ground, he told the AP that the ball was already rolling. Whole Foods is currently working out lease agreements for new locations, and the plan is to go into a “fairly rapid expansion” once the pieces are in place.
This plan does strike right at the heart of Whole Foods’ main issue, which has been, and continues to be, affordability. The company has already played a huge role in helping to cater to quickly-evolving consumer tastes regarding natural and organic food products, but the price tag is simply too high for many families.
For example, it’s much more frugal, not to mention easier, to purchase a couple of $1 boxes of Kraft Macaroni and Cheese for the kids than a bundle of produce that the kids may not even want to touch once it’s been whipped up into a healthy meal.
But when you actually crunch the numbers, Whole Foods may not be as outlandishly expensive as many make it out to be. A comparison between Whole Foods and Safeway grocery bills was written up in 2012 by finance website The Billfold, and found that while the average shopping trip does tend to cost more at Whole Foods, some items — organics, specifically — actually run a bit cheaper. The most important aspect of the article is that the price discrepancy was not very extreme, usually a difference of a few dollars.
On a more general scale, the United States Department of Agricultural put together a report in 2012 to determine the true costs of eating a healthy diet, which would ostensibly be more in line with customers of Whole Foods than a generic regional grocery chain. The USDA’s findings were rather surprising, as researchers found that depending on what foods are being compared, a healthier market basket of goods doesn’t necessarily come at a higher price. The biggest difference is in the price of fruits and vegetables, which cost significantly more per-calorie than foods from other categories, like grains.
Seeing as how it is possible to put together a relatively budget-conscious grocery list, the Whole Foods leadership may be making a very wise decision by opening stores with cheaper prices. Of course, the other big piece of the puzzle is attracting and maintaining a younger customer base. But co-CEO John Mackey, speaking with Slate, thinks they have that figured out.
“We think a streamlined, hip, cool, technology-oriented store—a store unlike one anyone’s ever seen before … is going to be pretty attractive to that particular generation. You can’t envision it yet because no one has. We’re creating it.”
Hip, cool, and cheap — that’s the plan for Whole Foods going forward. Considering the company’s success so far despite its higher prices, it’s hard to see how going for more affordability will run the company into the rocks.
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