No matter how you look at it, Whole Foods is in trouble. The company has been one of the worst performers in the S&P 500 recently, and saw its stock plummet 35% during one disastrous period last year. They have recently been testing their first-ever rewards program, aimed at giving loyal customers a sense of value. More amazing still, they announced last week that they would be opening a chain of discount stores—“geared toward millennial shoppers,” in the words of co-CEO Walter Robb, “while appealing to anyone looking for high-quality fresh food at a great price.”
”Whole Foods” and “value” aren’t words generally used in the same sentence, but the organic grocery landscape has shifted dramatically. Once the undisputed 800-pound gorilla in the category, the company now faces competition from Fresh Market (which is not doing well either) and Trader Joe’s, an outfit that many industry insiders feel is the crux of Whole Foods’ problem. Even WalMart, Target, Kroger and Costco have gotten into the act.
The real problem, of course, is the shift in the American consumer psyche that has occurred since the Great Recession of 2007 and beyond. It was once a badge of honor to be able to shop at Whole Foods and pay inflated prices, sometimes 50-80% higher for the same item than your neighborhood supermarket. Truly wealthy individuals didn’t shop there, unless their household help did it for them, but for the emerging affluent class it was a sign they had arrived—similar to buying a Porsche (a Rolls, even if you could afford one, might be mistaken for another large sedan on the road, but the glitter of a Boxster was unmistakable).
Happy days may return at some future point, but for the moment Whole Foods needs to rebrand itself. The boomers who sustained them over the past few decades are entering a period of living on fixed incomes and Social Security, and the emerging millennials are scratching to acquire some disposable income. Before you conclude that we’ve arrived at a new era of shabby chic, though, consider this: The real benefit of this societal reset may be a closer correlation between the price of an item and what that item is actually worth. If true, that would be something worth celebrating.
Mark Spivak is the author of Iconic Spirits: An Intoxicating History (Lyons Press, 2012) and Moonshine Nation (Lyons Press, 2014); for more information, go to amazon.com