Will a rewards program help or hurt Whole Foods?
As a Bloomberg News report points out, Whole Foods Market has never used a loyalty program since its founding on Sept. 20, 1980. News that the natural grocery chain is planning to launch a program came to light on the company’s third quarter earnings call when co-CEO Walter Robb said a regional test was imminent. Now, as it turns out, Whole Foods is testing an "affinity" program at its store in Princeton, NJ with plans to expand the pilot to Philadelphia later this year.
On the earnings call, Mr. Robb said Whole Foods had created "a unique program that we believe will deepen our connection with existing customers and appeal to new customers as well." He also said Whole Foods was looking to expand the program chain-wide in the U.S. by the end of the 2015 holiday season.
One criticism of loyalty programs is that ultimately they add costs that retailers must pass on to customers. At a time when Whole Foods has been going to some lengths, including the launch of a national marketing campaign, to move beyond its "Whole Paycheck" label, the choice is curious.
Earlier this year, during the company’s second quarter earnings call, Whole Foods’ other co-CEO, John Mackey, said, "We’re going to be investing more aggressively in price going forward while continuing to take our expenses down and continuing to innovate and differentiate."
- Whole Foods to Test Rewards Program as Competition Grows – Bloomberg News
- Whole Foods Market’s CEO John Mackey on Q3 2014 Results (Earnings Call Transcript) – Seeking Alpha
- Whole Foods’ CEO John Mackey on Q2 2014 Results (Earnings Call Transcript) – Seeking Alpha
Is Whole Foods a good candidate for a loyalty program? What will make the difference between success and failure for the natural foods chain as it rolls the program out?