Whole Foods’ stock price is down over 30% this year, mostly because same-store sales haven’t met analysts’ estimates, and the chain has informed Wall Street that it expects lower full year sales and profits. The response has been the announcement of Whole Foods’ first-ever national media campaign – a $20 million investment that includes TV, magazines, newspapers and other media. The TV commercials are handsome:
What is not clear is how this campaign will actually help Whole Foods.
Whole Foods, of course, has lots of customers. However, those people who do not shop or do not shop much at Whole Foods behave this way for one or more of five basic reasons:
1) There are more convenient options. The Pundit happens to enjoy shopping at Whole Foods, where the prepared foods section is really top notch and there are interesting brands to explore. But most cities do not have a Whole Foods store at all. Even those cities that do — for example, Pundit headquarters in Boca Raton, Florida — have just one. There are a half a dozen Publix stores, so we only wind up at Whole Foods when we have leisure time — not often — or have to be in that part of town. There are people very motivated to shop at Whole Foods but it seems unlikely that these ads will convince many people who aren’t as motivated into becoming such loyal shoppers.
2) Whole Foods is too expensive. Monikers such as “Whole Paycheck” stick because there is a lot of truth to them. Although the chain has promoted that consumers can find less expensive options by shopping carefully, that is a bit beside the point. The way most people shop Whole Foods is expensive. Nothing about this advertising program changes that perception. Indeed, the high production values and the emphasis on values — as opposed to value —– will probably reconfirm the notion to many that Whole Foods is very expensive.
3) Whole Foods doesn’t carry a lot of brands that people want, making it very inconvenient. If a consumer goes “all in” to the Whole Foods ethos, then a restricted offering is fine, but if someone wants some Diet Coke, then Whole Foods is a pain in the neck as that consumer now has to make two stops.
4) There are plenty of other stores selling items that, previously, only Whole Foods sold. Most supermarkets and many other stores have lots of organic, local, and natural products. So even if one believes in these “values” that Whole Foods espouses, they have little to do with the retailer and much to do with the producer. Maybe ten years ago, this campaign would have been powerful, but it doesn’t really answer the contemporary question approaching consumers: Should I go out of my way to buy Organic Girl or Earthbound Farms salad at Whole Foods or pick up identical or similar products at many more convenient and less expensive venues.
5) Some consumers are turned off by the ideology. They may want “whole food” but they hate the culture that Whole Foods celebrates — they don’t like places that urge them to “share your values, shape community,” etc. They would just as soon get their organic milk from Wal-Mart.
Whatever the impact on Whole Foods, the overall impact on the produce industry is not going to be good.
Just as we used to warn people to be careful about how they promoted their food safety programs, lest they imply that other retailers were selling unsafe produce, so Whole Foods’ emphasis on the idea that it has unique values that drive its procurement is a sticky wicket.
This is the point we recently made in our piece Whole Foods’ ‘Responsibly Grown’ Program Turns Out To Be Pretty Irresponsible — Implies Other Farmers Are Not ‘Responsible Growers’.
We went to our local Whole Foods the other day specifically to see if Whole Foods was suddenly expressing some unique values through its procurement system. It is not.
On the conventional side, it was selling items such as:
Christopher Ranch white pearl onions
Columbine Vineyards holiday grapes
Love Beets brand beets
Pero Family Farms snipped green beans
Sunset Kumato tomatoes
Sunset Gourmet medley tomatoes
Sunsweet fresh plums
Hudson River Fruit New York state apples
Heller Brothers grapefruit
Bee Sweet Citrus Preferred Chef Meyer lemons
Majesty (Five Crowns Marketing) California cantaloupes
Southern Specialties French beans
Ocean Spray lemons
Chilean mandarins packed by Lucca Freezer & Cold Storage
Pandol mixed variety grapes
Bolthouse Farms drinks of various types
On the organic side:
Earthbound Farms salads and greens
Organic Girl salads and greens
Earthbound Farms carrot juice
Deardorff Farms celery
Lots of Cal-Organic vegetables
Now there is nothing wrong with any of these brands. But they are indistinguishable from what one can find in countless thousands of supermarkets across the US. To claim that Whole Food’s procurement is uniquely promoting good values is just not true. The company buys from the same supply chain as everyone else.
Whole Foods has benefited over the years from ill-informed consumers who sometimes assume that everything at Whole Foods is organic. That is not true either.
Now Whole Foods is claiming a distinction where there is no difference. Doesn’t that contravene a value in and of itself?
Farmers have to sell their products in many venues, and if Whole Foods is going to cast doubt on the procurement practices of other retailers, it will cause some consumers to hesitate and buy less. That is bad for farmers and for public health. It is also very unfair. Whole Foods ought to rethink its approach.