Oysters for $1. Rotisserie chickens for $2 off Tuesday. 25% off assortment. Upscale grocer Whole Foods is breaking with its “Whole Paycheck” reputation for high prices and slashing prices on many of its foods this year as a concession to high food inflation that has hit shoppers, including the middle- and upper-middle-class people, who frequent the store.
In that sense, Whole Foods is following in the footsteps of less-prestigious rivals like Walmart, Aldi and Kroger, which also offer bargains to shoppers.Few Americans have escaped food inflation: Grocery prices have risen 22% since 2011, and spending on meals at home now accounts for the largest share of Americans' discretionary spending in the past three decades.
“Customers right now seem to be gravitating toward where they perceive the best value,” said Whole Foods CEO Jason Buechel, who joined the company in 2014 and became chief executive in 2022.
Whole Foods shoppers are trading up for cheaper products or opting for Whole Foods' 365 private label products, he said, a trend that continues even as inflation subsides. As a result, Whole Foods, which operates more than 500 stores in the U.S. and plans to open 30 new stores a year, can't afford to alienate customers.
Lowering prices is harder than you think
Buell said it's not easy for grocers to lower prices: Whole Foods' quality standards and animal welfare rules, such as selling only cage-free eggs, mean it has fewer suppliers to choose from, for example.
Amazon, which bought Whole Foods in 2017, doesn't break out Whole Foods' revenue on its earnings reports. But the grocer makes up the majority of the tech giant's “brick-and-mortar retail” division, and its revenue grew 6% last quarter, outpacing rivals such as Kroger. Whole Foods has annual revenue of about $20 billion.
Buell said Whole Foods' prices are still out of reach for some families, but the company's new deals help “democratize” healthy grocery shopping in the U.S. for shoppers who take advantage of upcoming promotions. Whole Foods' longtime focus on healthy foods has differentiated it from competitors, but Buell lamented that healthy foods aren't more available in the U.S. and that many products sold there are of lower quality than those in Canada and Europe.
Combating climate change
Buell said Whole Foods is also committed to food and agricultural practices that are healthier for the planet. Short-term weather patterns that disrupt food production and transportation have forced Whole Foods to develop backup plans and diversify suppliers, as it did last year with leafy greens and berries. In the long term, climate change will affect not only how grocers source food, but also what foods they can source. “The problem we face is that the products we know and love today may no longer be available,” Buell said.
Buechel said growing up in rural Wisconsin with parents who were dairy farmers gave him a special affinity and understanding for the agricultural world, and prior to joining Whole Foods, he spent 12 years at Accenture working on technology for retailers.
“If we don't do something different, [climate change] “Regenerative agriculture will have a big impact on the yields of the crops we grow and the quality of the products we bring to market,” says Buechel. One of the reforms that Whole Foods has implemented is working with some of its suppliers on “regenerative agriculture,” which aims to restore soil that has been degraded by overuse. Currently, Whole Foods sells about 350 products that are made using regenerative agriculture methods.
Wake up bankrupt?
As a company that promotes sustainability and healthy eating, Whole Foods could find itself embroiled in a culture war. But Buechel says it's important that the messaging stays focused on issues relevant to the company's business and not take a dogmatic stance. “Our focus is to serve a higher purpose, so we're involved in issues that directly relate to the nutrition of people on the planet, so things like animal welfare standards are key differentiators for our business and areas we're going to focus on,” he says. “We live in a world right now where it's easy to take a position on anything.[to] “Instead of creating division, what we want is for people to come together and celebrate food.”
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