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  • From: "Tradingpost" <tradingpost@lobo.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] “The economy caught a lot of them off guard”
  • Date: Thu, 07 Aug 2008 10:32:02 -0600


Whole Foods Looks for a Fresh Image in Lean Times
http://www.nytimes.com/2008/08/02/business/02food.html?em
August 2, 2008

PHILADELPHIA — Shawn Hebb may have one of America’s toughest jobs: convincing
people that Whole Foods Market can be an economical place to shop.

This week, leading five customers through a store here, he breezed past the
triple cream goat cheese, $39.99 a pound, and the fresh tuna, $19.99 a pound,
to focus on the merits of beans, chicken thighs and frozen fish.

Then he held up a $1.50 package of tofu. “It looks gross but it’s delicious,”
he said.

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.

Walter Robb, the company’s co-president, acknowledged that Whole Foods was
fighting strong consumer perceptions about the chain’s prices, and he added
that some of that was deserved. But he said the company had made a strong
effort to challenge its competitors on price.

“I’m getting a little tired of that tag around our neck,” he said, referring
to the nickname. “We are a lot more competitive than people give us credit
for. We challenge anyone on like items.”

Whole Foods’ makeover comes amid a tumultuous time in the grocery industry,
as customers struggling to pay for higher-priced fuel and food are trading
down to lesser products and discount-oriented stores.

A July survey by TNS Retail Forward, of Columbus, Ohio, found that 20 percent
of shoppers have changed where they buy groceries and household essentials
because of the economy. The biggest beneficiaries have been dollar stores and
discount grocers like Aldi and Save-a-Lot, which offer a limited selection at
extreme discounts.

The losers have been convenience stores, drug stores, health and natural food
stores, and conventional supermarkets.

In the last month alone, grocery chains like Safeway, Supervalu and Delhaize
Group, whose stores include Hannaford Brothers and Food Lion, have lowered
their earnings outlooks because of higher energy costs and consumer
penny-pinching. On Thursday, Winn-Dixie executives said increased budget
offerings in the most recent quarter had bolstered sales but hurt the
company’s earnings.

“The economy caught a lot of them off guard,” said David Orgel, the editor in
chief of Supermarket News, a trade publication. He said that many grocers,
aiming to compete with the likes of Whole Foods, have spent the last few
years positioning their stores for a “more upscale experience.” They are
suddenly scrambling to give consumers the budget items that they are
demanding.

Making matters worse for Whole Foods, consumer interest in organic food
appears to be leveling off after several years of double-digit growth,
according to the Hartman Group, a market research firm specializing in health
and wellness.

Laurie Demeritt, president of the Hartman Group, said core consumers for
organic goods, about 15 percent of the population, are becoming even more
committed. But people less attached to such items are continuing to buy
organic dairy products, produce and meat, and are buying fewer organic goods
among packaged items, like cereal and crackers, she said.

“They don’t see those center-store categories as being so important,” she
said. “The economy has only exacerbated that situation.”

The downturn in the economy comes during an inglorious stretch in Whole
Foods’ otherwise remarkable 28-year history. It was not long ago that Whole
Foods was the toast of Wall Street and the envy of its competitors, with its
gleaming stores stocked with organic produce, hormone-free meats and premium
cheeses.








  • [Livingontheland] “The economy caught a lot of them off guard”, Tradingpost, 08/07/2008

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