Have multiple rounds of price cuts changed Whole Foods’ high price image?
Whole Foods co-founder and CEO John Mackey says the chain and its parent company (Amazon.com) are serious about ridding the grocery chain of its “Whole Paycheck” image.
In an interview with CNBC earlier this week, Mr. Mackey said Whole Foods has gone through three rounds of price cuts since being acquired by Amazon in 2017 and is currently in the process of another round.
“Cut our costs, lower prices, get more business, lower prices, cut costs, and so I think we’re in a virtuous circle right now,” he said.
Mr. Mackey credited Amazon with helping Whole Foods improve its supply chain and operations.
“Amazon’s brought new critical tools to Whole Foods to help us think it through — to cut down our shrink, cut down our spoilage, cut down our theft that’s occurring,” he said. “We’re just bringing a more critical eye to our costs at Whole Foods.”
Price cuts trumpeted by Whole Foods in recent years have been dismissed by some as simply “noise” as the retailer selectively reduces prices on key items, allegedly giving an impression of savings while overall market baskets remain largely unchanged.
The chain, like all others in the grocery industry, has seen its costs rise with the outbreak of the novel coronavirus. There does seem to be a respite coming for grocery as the rush to stock up on food and everyday staples has eased due to the fact that consumers are getting used to living and shopping in a period of pandemic. Further, millions of Americans have less cash because they are unemployed as a result of COVID-19 and/or are waiting for another round of economic stimulus action by the federal government.
Kroger CEO Rodney McMullen told CNBC last week that he sees food inflation stabilizing.
“As we look forward, we see lower inflation than what it’s been over the last several months,” said Mr. McMullen. “It’s one of the reasons why we didn’t pass through all of the inflation that we incurred in the second quarter.”
Kroger’s CEO pointed to meat as a key category where prices are leveling off.
“There’s plenty of raw materials supply out there,” he said. “It’s just a matter of the plants being able to process it.”
- Whole Foods CEO: We’re in a ‘virtuous circle’ of cutting costs and lowering grocery prices – CNBC
- Study says Whole Foods is the priciest grocer of them all – RetailWire
- Again, Amazon attempts to shed Whole Foods’ high price image – RetailWire
- Analyst: Whole Foods’ lower price claims are mostly ‘noise’ – RetailWire
- Kroger CEO sees prices stabilizing, cooking demand lasting: Our customers ‘actually enjoy it’ – CNBC
DISCUSSION QUESTIONS: Is being perceived as price-competitive a necessity for Whole Foods to continue growing its store footprint nationally? How effective do you think previous cuts have been in altering the chain’s pricing image, and what further actions should the chain take?