Whole Foods Shifting Back to Healthy Roots
By Tom Ryan
Over the years, Whole Foods
has dabbled with chocolate fountains, and imported sea salts
and truffle oil but it is now looking to shift back to its granola roots.
“There have
been these two dominant values driving our products over the years,” Whole
Foods CEO John Mackey told the Associated Press in an interview. “One
is food as health and the other one is food as indulgence. Those have battled,
you might say, for the soul of Whole Foods.”
Among the changes
the retailer plans to roll out in 2010:
- The product
mix is expected to evolve with health becoming the dominant theme. The
changes won’t be made overnight and the mix will still include some indulgent
items; - A heavier
emphasis will be placed on healthy eating and education. Teams of employees,
classes, books, DVDs and supper clubs will be added to support the positioning; - Whole Foods
claims it will soon become the first chain to provide nutrient-density
labeling, indicating the amount of nutrients per volume of an item; - Eventually,
Whole Foods will also carry store-brand products for special diets and
back nutrition research, which it will provide to consumers.
The article
points out that Whole Foods, co-founded by Mr. Mackey in 1980, was launched
solely around healthy food choices but the mix changed as a growing number
of gourmet food aficionados flocked to the chain. The downturn has crimped
sales of indulgent items across industries and Whole Foods has increased
its store brands and promoted lower-priced options in response.
At the same
time, young Americans are both interested in health issues and concerned
about obesity and rising health care costs. Through Whole Foods, Mr. Mackey
is aiming to position healthy eating as a large part of the solution.
“All the arguments
about health care is about who is going to pay for it,” Mr. Mackey told
the AP. “There is not any funding or strategy about how to make America
healthier. I think Whole Foods is going to take that challenge up.”
Bill Bishop,
at Willard Bishop Consulting, likes the move. Demand for pricey, indulgent
foods isn’t expected to return any time soon and while many chains carry
organic food, none “owns” the health market. Establishing itself as the
health expert could even strengthen relations with foodies, who have increased
their focus on local and organic foods.
“The biggest
risk is not hitting this one hard enough,” Mr. Bishop said.
Discussion
Questions: What are the pros and cons of Whole Food’s shift to focus
more on healthy foods and healthy eating? What guidelines should drive
any transition? Should other grocers make similar moves?
The article makes the “con” argument itself–Whole Foods runs the risk of turning off the foodies and the indulgent items have to be turning a nice profit (given the prices they charge here in Atlanta). Without the huge assortment of indulgent stuff, foodies are rarely going to go there–too many other options.
While there is nothing wrong with changing assortment to meet the current economic demands, Whole Foods should take great care in moving away from the indulgent. Indulgence and healthy eating are mutually exclusive. Chocolate fountains may be a bit over the top, but don’t eliminate high-end chocolate.
Many who eat healthy have an appreciation for indulgences. Eating healthy does not mean eliminating imported sea salts and truffle oil. There is room for fine cheeses in a healthy diet. Being nutritionally aware does not mean eating a structured diet that leaves no room for pleasure. Healthy eating means eliminating processed foods, junk foods, and sugary drinks. Healthy eating is not self punishment. Eating healthy is an appreciation for food, not a demanding regimen. Eating healthy is a limitation of calories, not an elimination of enjoyment.
Whole Foods has the opportunity to satisfy a need in the marketplace, a need that is identifiable to shoppers. As Whole Foods concentrates on providing healthy foods and the education required to foster healthy eating behavior, their bottom line will look healthier as well. However, their strategy will require building an image that fulfills important consumer needs without undermining the motivation for regular shopping trips.
I can envision their ability to offer valued products and a satisfying shopping experience that goes beyond the time spent in the store. Consumers will buy what they feel is good for them and good for their families. That aura will carry over into the home and around the kitchen table.
The major challenge as I see it is to attract consumers with the goodness of it all and have them come back often for those other important needs: taste, freshness, convenience, variety, and value for the money.
When people are in a rush, getting them to participate in educational programs or events is difficult. When people are satisfying the taste needs of several members of the household, the knee jerk reaction is to give each person what they want…or let them prepare it themselves.
For Whole Foods it’s not simply offering the products and services but effective positioning and merchandising to engage shoppers over the long haul. If they can do this successfully, I believe their profitability will demonstrate the advantage of a focus rarely considered by other supermarket retailers.
We all agree that you can’t be all things to everyone and yet we try. As a consequence, energy is expended in too many directions eliminating the buildup of deep understanding that comes with a concentrated effort. Controlling that investment of energy can increase productivity overall and with it, profitability.
Like most good concepts–the Whole Foods positioning only extends so far. Lose the focus and you lose the magic. While Whole Foods management characterizes the internal schizophrenia as “Healthy versus indulgent,” I think there is a decent chance that they got there by misreading what consumers were actually saying about Whole Foods’ assortment in the early days.
What I mean is this. Fresh Copper River salmon, flown in that day and never frozen might be called “indulgent”–but perhaps what the higher-end consumer, attracted to Whole Foods in the early days, thought of was “better.” Better because it is fresher? Better because it is natural? It really doesn’t matter. The point is, consumers thought it “better”–but not “indulgent.”
Of course, it is a lot harder to make that argument about chocolate fountains and truffles. But it is also inevitable that some of the consumers with the means and predisposition to shop at Whole Foods would also be interested in the occasional indulgence. That they could find it at Whole Foods I think fell into the camp of “nice” but not “the reason I shop there.”
So, should Whole Foods return to its roots? Absolutely. But are those roots “organic” and “health food”–or “better food”? It is important that Whole Foods find out before putting up too many of the Euell Gibbons cut-outs in the stores.
Good move, but of course time will tell. I recall shopping at Whole Foods in the early days, confident that everything I bought there was “healthy.” That eroded as I read labels over the ensuing years, and Whole Foods ‘halo’ went away for me. I think a lot of shoppers, if given the opportunity, would go to a place they just trust to provide healthy foods. Period. Remember how supermarkets had (some still do) little sections in the corner somewhere for “healthy” or “natural” foods? Maybe Whole Foods could have a little section like that for “indulgent” foods. That way, they could still stock some of the stuff (they really should) but at least you’d know what you were getting into. There are lessons here for other retailers, and, in terms of Whole Foods’ private label plans, for branded manufacturers. It all, once again, gets down to being the consumer advocate.
Whole Foods needs to have an all-healthy image in order to keep its separate but more expensive appeal to its consumers. The timing is excellent because conventional supermarkets have been discontinuing non-fatty foods left and right in the SKU rationalization process.
Seriously, what took them so long? While Whole Foods was hoping that the total mixed bag would add up to hefty margins in the end, retailers and grocers from Walmart to Safeway have been laser focused on bumping up their health and wellness propositions. Target’s just-launched Archer Farms Simply Balanced line promises “better-for-you nutrition that’s budget friendly;” Safeway’s O Organics line won’t just be sold in Safeway, it is being made available to regional, non-Safeway stores. Whole Foods is going to out-value this ever-growing field of high-quality, nutrition-focused private labels? Perhaps too little too late.
At the same time, if Whole Foods marginalizes or abandons its gourmet offerings, they’ll be leaving a big hole in that space…okay, a smallish one in cities like New York and San Francisco; however, in many towns, Whole Foods is the main destination for gourmet. Why not keep that well-established supplier base and bifurcate the store into gourmet and wellness sections?
I think Gene’s comments above are absolutely right. There’s a Whole Foods around the corner from my house that we frequent for both healthy and indulgent food. Who said ‘indulgent’ means unhealthy? Yes, I think Whole Foods needs to continue to distinguish itself from the common grocers by being a ‘healthy’ alternative. But, should it go all the way to the granola end of scale? Not if it hopes to retain a big and profitable segment of its customer base.
Whole Foods’ sophisticated customers will love this. They know that they should be eating better, and are looking for guidance where it counts–in the store. And the indulgences will fit right in.
Here’s the thing. Besides health attributes, many, many core natural foods shoppers also place high or equal value on mission and company integrity. WFM’s historical ‘follow the money’ strategy has violated that trust in a variety of ways over the last decade. Reaching out to or asking forgiveness from those that have stayed the values course and watched from the sidelines as WFM became bloated with luxury items will be difficult.
Have you seen the growth and comp sales reports of the natural foods cooperative movement over this same time period? While the retail world has been enamored with watching the high profile, self-centric WFM act out, these local and organic focused, community owned, smaller store fronts have blossomed, with disgruntled WFM core shoppers and former staff members leading the way.
The strategy for WFM now has to be to move the less vested, mid-level consumer (i.e. those now abandoning the supernatural mothership as an extravagant) to become a core shopper, rather than any expectation of being embraced by those they spurned.
I don’t think I go along with the dichotomy of “healthy/indulgent”: to me this is mixing nutritional attributes with price points. For example, how would one describe “organic” products? Are they “healthy” because…well, that’s what they’re supposed to be, or are they “indulgent” because you’re paying much more for what is usually something only marginally better (if that)?
I think WF has long promoted healthy eating: it sells quality products and it makes sure you don’t eat too much by charging a lot for them!
They are searching for the center of the Grocerant niche. Blending “better for you” with both prepared ready-to-eat and ready-to-heat foods. Clearly the consumer has moved and it’s time Whole Foods does the same. Go to any Whole Foods between 4:30 & 6:30 PM and walk the store. It’s the prepared food stations that are garnering all of the action. Blending the center of the store with prepared food offerings is art. Understanding the consumer is an ongoing process.
Whole Foods is responding to the overall movement back to “real” food, and for that it’s right on trend. The frugalistas today claim they don’t want “indulgences,” but if it is masked as “good for you,” then the guilt is gone….
The key is for them to continue with the samplings, the “foodentainment” they do so well, otherwise they risk being a “me-too” as chains like Safeway and others increase their organic and healthy food offerings.