Study says Whole Foods is the priciest grocer of them all

Photo: RetailWire
May 16, 2019

Whole Paycheck it is. Despite’s publicity push to promote price cuts at Whole Foods, the chain remains the highest price grocer in the land, according to a new study by Bank of America Merrill Lynch (BOA).

The study, which included the round of price cuts announced on April 3rd that the grocer claimed included deeper discounts and double the number of exclusive deals for Prime members, doesn’t appear to have moved the needle on the chain’s pricing competitiveness compared to other grocers.

BOA’s research included 10 pricing studies in eight different metropolitan areas around the country over the past year. The last of these took place after Whole Foods announced its latest price cuts.

“In Philadelphia, Whole Foods’ basket was still priced at a +39 percent premium to Walmart (the grocer with the lowest overall average prices). Produce [was] still at a +25 percent basket premium to Walmart, and center-of-store items at a +58 percent premium to Walmart,” BOA analyst Robert Ohmes told CNBC.

Whole Foods’ premium to Walmart was actually one percentage point higher than BOA’s pricing studies over the past three to four years. While comparing Whole Foods prices to Walmart’s may seem unfair on the face of it, consider that Sprouts Farmers Market, a growing competitor in a similar niche to Whole Foods, had an average premium of eight percent to Walmart’s prices.

Most of the price cuts by Whole Foods were in produce, according to the research, with fewer deals to be found in other parts of its stores.

The BOA research supports findings by others that the hoopla around price cuts at Whole Foods didn’t add up to big savings for the chain’s customers. Last fall, a Gordon Haskett market basket study of 108 items sold by Whole Foods found that prices at the chain were only 0.8 percent lower a year following its acquisition by Amazon. Prime members, who were supposed to benefit most from Amazon’s ownership, only saved an additional $1.54 on a basket of over $400 when compared to non-members.

DISCUSSION QUESTIONS: How long before Whole Foods customers call a figurative BS on its repeated price cut claims? Should Whole Foods continue to try to escape its “Whole Paycheck” image or just own it?

Please practice The RetailWire Golden Rule when submitting your comments.
"Whole Foods is strictly applying science (in this case, data science) to a challenge that still requires some art."
"It’s one thing to surrender your phone number to get a discount at a traditional grocer; it’s another to have to pay $12.99 a month for it."
"Loyalty programs are an outstanding way to connect with consumers and give them the perception that they are getting something back from the Amazon team."

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21 Comments on "Study says Whole Foods is the priciest grocer of them all"

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Art Suriano

The problem isn’t Whole Foods and their pricing as much as it’s the media who refuse to do their job. Today almost all news articles are written from the desk with very little research, and that’s sad. Yes, there has been a tremendous buzz over the last several months about the decreases in Whole Foods’ prices, and now it took a research firm to tell us the truth. That’s sad. As for Whole Foods, customers aren’t stupid, and they are most likely figuring out that the hype in the media is just “fake news.” Those loyal to the brand will continue to shop, and those who came because they are Prime customers looking for a deal will not. Eventually, everyone will catch on unless Amazon does some serious price cutting and frankly, I’m not sure that’s wise if they wish to keep the Whole Foods brand as one of quality and unique products.

Brandon Rael

Despite all the publicity around the additional savings Prime members would receive at Whole Foods, shopping there is still a luxury experience. Yes, the Amazon/Whole Foods team has had a couple of iterations of additional savings) but outside some produce and savings sprinkled throughout the store, customers are still paying a premium.

As we are witnessing in the next-day shipping wars, cost cutting essentially becomes a zero sum game. It’s time for Whole Foods to establish a real loyalty program, one that gameifies the shopping experience. Considering all the synergies between the Amazon Prime members and Whole Foods customers, why not consider letting the members leverage their points/dollars towards Amazon or grocery items?

Loyalty programs are an outstanding way to connect with consumers and give them the perception that they are getting something back from the Amazon team.

Ben Ball

“Price cuts” does not equal “cheaper.” If I’m a Whole Foods shopper, I appreciate the 1 percent. If I’m not, and I’m not willing to pay premium prices, I’m not switching anyway.

Zel Bianco

Oh man, this one hits too close to home. I have this little argument with my wife all the time. She believes that the prices are comparable, sorry honey (to other grocery stores) and I say they are not. So put me in the “calling it BS” category. Yes the campaign has been trying to convince us that they are lowering prices across the store, but I think as soon as they lower them in one category like produce, they raise them another category like fish. And although perhaps it’s not a fair comparison, shopping anywhere else outside of NYC the price differences are dramatic in every single category across the store! It’s true when comparing Whole Foods compared to Stew Leonard’s or Whole Foods to Stop and Shop. I will say that the seafood at Stew Leonard’s is just as good if not better than Whole Foods. Some of the other supermarket chains, not so much.

Cathy Hotka

Whole Foods’ discounts for Prime members are also a reminder that there aren’t discounts for those of us who refuse the pay the Prime fee. It’s one thing to surrender your phone number to get a discount at a traditional grocer; it’s another to have to pay $12.99 a month for it. Whole Foods remains a luxury experience for us.

Ryan Mathews


Maybe, maybe not.

For one thing, the Prime fee doesn’t just apply to Whole Foods. It brings members lots of benefits — real or imagined. So if you were already a Prime member, the Whole Foods discount is just icing on the cake, no matter how miserly a portion.

And as far as paying for a discount goes, that doesn’t seem to slow down Costco shoppers.

I’ve always argued that price isn’t the issue, it’s price perception that drives purchase, and price perception is a very nuanced tool — just ask Amazon.

Tony Orlando

Price perception — I have been preaching this for years, so thanks for your insight. The mega stores aren’t always the best place for low prices. Our industry continues fight like maniacs to sell goods at prices only a consumer can love, hence poor bottom lines for food retailers.

Jeff Sward

The last sentence about Prime members only saving an additional $1.54 on a basket of $400 makes me raise an eyebrow on the whole study. That just doesn’t sound plausible. My own one-person shopping survey showed Whole Foods hitting parity if not lower prices than my former first-choice grocery store on the produce I buy most often. And Whole Foods had obviously better quality. No I do not buy any of the exotic, organic packaged goods. They were and continue to be ridiculously expensive. A review of the summarized data here would be interesting. I’m not sure it’s so easy to create apples-to-apples comparisons with before and after Whole Foods to before and after “other” grocery stores. No pun intended.

Paula Rosenblum

Amazon owned properties get more free press than anyone. I still can’t believe a markdown on 44 items became front page news, rather than a paid-for ad.

Art is right about the media, and this fixation on clickbait is going to drive the demise of our country. And no, I am not exaggerating.

Tom Erskine
3 years 8 months ago

No one bargain shops at Whole Foods. Whole Foods is an incredible example of how a premium experience including better brand image, premium brands, healthier choices, better overall category curation, and better visual presentation, can translate into commanding a premium price.

David Weinand

Whole Foods’ core customers aren’t going to shop more or less over a 1 percent to 5 percent decrease in prices. They are there for the perception that their products are fresher, healthier, and overall better than what they get from other groceries. Whole Foods needs to own their image as a premium chain.

Ron Margulis

Whole Foods is strictly applying science (in this case, data science) to a challenge that still requires some art. As much as they’d like to think that their shoppers’ fickleness can be modeled using advanced algorithms, it can’t be. There is still a need for humans to give the pricing, promotion and assortment programs generated by those algorithms a thorough review for quality control. Call it a sniff test to uncover potentially reputation impacting marketing activities. Without these QC efforts, Whole Foods will continue to operate in a shifting minefield of public opinion.

Greg Zakowicz
Greg Zakowicz
Sr. Ecommerce Expert, Omnisend
3 years 8 months ago
There are certainly other factors to consider here, such as geographic location and products actually purchased. I live in an area where it is now pretty much Whole Foods and Harris Teeter (since Kroger pulled out of the state). Harris Teeter is just as, if not more, expensive as Whole Foods for things like produce, which I buy a lot of. Whole Foods also offers a much better selection of organic products, including meat, than Harris Teeter. In other cities there may be more store choices available to the consumer. If people are shopping for Cheerios and other name brand type products then yes, Walmart would seem like the obvious place to shop for lower prices. Another factor to consider is how Prime members shop at Whole Foods. If they pay with an Amazon credit card, they will also receive 5 percent back in Amazon credit. That 5 percent can really add up. I have done the math with my own family’s shopping habits, and Whole Foods makes more sense than Harris Teeter. Although Wegmans… Read more »
Bill Hanifin

We should not be surprised about the differential in pricing between, for example, Walmart and Whole Foods. Nor should we be surprised that Whole Foods is the highest priced grocer in the market. Their positioning to deliver quality, “natural” foods in a unique environment has always been delivered with a cost premium attached.

Two disappointments:

  1. The so-called integration with Amazon Prime has delivered nominal value to Prime members and has not done anything to change behavior towards Whole Foods. Will Amazon ever decide to put real value on the table to entice shoppers?
  2. When will eating healthy become affordable or at least priced in line with or at a small premium over traditional grocery items? There is a big disconnect between the obvious need for us to eat a more healthy diet and our ability to fit it into our budget.
Neil Saunders

This comes as no great surprise. The price cuts have always been headline-grabbing and cosmetic. They have never represented a substantial repositioning of Whole Foods.

There are some products at Whole Foods where a higher price is justified. These include things like deli products, meat, fish and the patisserie. Here the quality justifies the price.

However, there are many more basic items – including branded products available elsewhere – where prices are very out of kilter and are unjustifiably high. Until Whole Foods remedies this it will continue to be seen as bad value for money.

Shep Hyken

One of the value propositions that Whole Foods offers is the quality of its merchandise. And you get what you pay for. You can’t compare a premium experience to a value experience (as in Whole Foods versus Walmart). Whole Foods never said they were the lowest-priced grocer. If there is something to be owned, it is proving that it is worth it to shop at Whole Foods. Same goes for the other side. There’s a reason it’s worth shopping at Walmart. The customer has to decide which experience and merchandise they want. The customer decides if it’s worth the difference.

Cynthia Holcomb

There is something insulting about shopping Whole Foods, before and after Amazon. Pricing. With so many good places to shop for equally good produce and everything else, I dislike the feeling of being robbed at the checkout counter. Whole Foods is a presentation experience at best. At worst, yes Paula is correct, the media cannot resist the easy clickbait of faux journalism on anything and everything Amazon. Amazon just needs to own its “Whole Paycheck”!

Georganne Bender

The high cost of shopping at Whole Foods comes back to that old retail adage, “There is no reality, only perception.” You are what you are perceived to be by your customers and your community whether you like it or not. In the case of Whole Foods this perception IS reality – prices are higher than other grocery stores.

Whole Foods customers don’t seem to mind the higher prices because they are looking for a different experience than discount shoppers. But touting price cuts when Prime members are actually saving minuscule amounts over non-members will catch up to Whole Foods sooner or later. Consumers aren’t stupid.

Lee Peterson
I don’t get the problem. Harrods was just voted the best luxury department store. But is anyone bugging them about high prices? Cumulatively, Whole Foods is CLEARLY the best grocery store (although some units may not be) with the best quality in terms of product, the best environment and the best people. Hence, their prices are higher. So? Ralph Lauren is better than Abercrombie and their prices are higher. Of course they are. Same with Whole Foods. It’s better = it’s more. If you can’t afford “better,” then don’t go. That’s a given. And while you’re at it, don’t go to Harrods either. What that means though is that there can only be so many Whole Foods. And again, so what? Amazon has already realized that and is touting the fact that they’re going to open another grocery chain. Smart. Time to get off the “Whole Foods’ prices are higher” duh and move on to something more provocative, like what exactly IS Amazon going to open?
Ananda Chakravarty

The whole Whole Foods concept has been whacked out of proportion because of Amazon’s marketing machine. They are a mere 1.1% of the grocery market (or in that range). It’s also very much against the grain of Amazon — where Amazon is commoditizing products, Whole Foods attempts to build premium branding.

As many on this thread have already stated, this is not new news, and consumers have already factored Whole Foods pricing into their decision on whether to shop there. Ideally, Whole Foods needs a new angle, as their original premium organic play in the market has been copied by tons of large and regional grocers, diluting any brand image edge they had.

They still have the “status” value for some customers, and I believe most of their locations are in more affluent neighborhoods, but it’s a deteriorating image that needs to be revamped. Amazon still hasn’t done much to enhance it.

Andrea Leigh

Does anyone shop at Whole Foods for the deals? No, people shop there for the experience and expertise. Which goes to show that experiential retail is still alive and strong.

"Whole Foods is strictly applying science (in this case, data science) to a challenge that still requires some art."
"It’s one thing to surrender your phone number to get a discount at a traditional grocer; it’s another to have to pay $12.99 a month for it."
"Loyalty programs are an outstanding way to connect with consumers and give them the perception that they are getting something back from the Amazon team."

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