Expect prices for frozen foods and dairy products to fall, thanks to competition from Walmart and Trader Joe’s
A trip to Whole Foods may no longer consume your whole pay check.
Faced with declining same-store sales in recent years, Whole Foods is transforming itself in to a supermarket with lower costs and prices. That’s likely to be a boon for customers who have been enticed away from the high-end organic grocer by cheaper competitors like Trader Joe’s and Kroger, where prices on comparable products are as much as 15% lower. Indeed, Kroger has overtaken the high-end organic grocer as the largest seller of organic and natural food in America.
“There’s a lot of pricing pressure because their customers can get the same type of healthy food at lower costs at places like Walmart,” says Michelle Grant, head of retailing research at Euromonitor.
Most immediately, this means price cuts for frozen food and milk and butter are coming your way. In a recent conference call with stock analysts, Whole Foods execs said that they had been testing price reductions in the former category with “really great results.” It’s also launching a pilot program this summer to cut costs—and price tags—of dairy products.
Clients who have stuck with Whole Foods through an era of high prices are also going to be the first to benefit from the launch of its long awaited loyalty program. Whole Foods has been testing a customer rewards card for some years now—over 200,000 customers currently participate—and the execs said that it would roll the scheme out nationwide by the end of this year.
The grocer wouldn’t disclose specifics on the affinity scheme, but analysts expect it to be simple. Instead of requiring customers to save digital coupons, like Target’s Cartwheel app, or accumulate points, like CVS’ Extra Care program, Whole Foods will likely just offer direct discounts to those enrolled in the loyalty program.
Finally, customers who have lunch or drinks at one of Whole Food’s in-store cafes and bars may soon have to share tables with larger crowds drawn by lower restaurant prices. Partly in response to shareholder pressure, Whole Foods added five new directors to its board this week, including Panera Bread Co. founder and chief executive Ron Shaich. Some experts think that he’ll be asked to help the executive team build more “retailtainment” options.
“Panera is a midmarket brand that understands that consumer base and what they’ll pay for,” says Grant. “That’s different from the high-end crowd that Whole Foods already draws.”
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