Sales for generic brand groceries and other moderately priced goods are up as sales of just about everything else are trending downward.That poses a problem for high-end retailers like Whole Foods who rely on customers willing to pay quite a bit more for the experience of shopping for their upscale goods at their stores.
Now that gourmet groceries are a luxury most shoppers are quickly cutting out of their budgets, Whole Foods must quickly reposition itself as a better value.
The New York Times reports stores are taking steps such as offering guided tours of good deals shoppers can find and displaying “weekly buys” fliers.
Andrew Wolf, an analyst for BB&T Capital Markets, tells the New York Times that Whole Foods was “a tale of two stores.” He says the grocery items in the middle of the store, dry goods such as cereal and pasta, are competitively priced.
The “outer items,” such as meat and produce, tend to be more expensive at Whole Foods, he said. That can be risky at a time when consumers are becoming increasingly price sensitive.
It’s becoming clear that this worsening economic environment is having an impact on consumers at all economic levels,” Mitchell P. Corwin, an analyst at Morningstar says. “The whole paycheck image can really hurt you.”
Whole Foods, however, does not want to risk losing a segment of its customer base to this image. Long an unconventional retailer, the company has decided to continue to pursue the value branding strategy. One part of the experience Whole Foods does not want to change is the high level of service customers have come to expect.
The next time you visit Whole Foods, ask a representative for a tour of the week’s best deals. You just might go home with a list of suggested recipes for tonight’s dinner.
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--Bridget O'Sullivan
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