Will Flash Sales Help Grocer Lose ‘Whole Paycheck’ Label?
Despite past efforts to throw off its "Whole Paycheck" label, Whole Foods Market remains the most expensive place to buy groceries in the minds of many consumers. That’s why the chain turned to aggressively promoting its own-label products and offering coupons similar to conventional markets. Now, it’s going one step further and offering special deals for a day — or even a few hours — at a time via social media channels.
According to a Wall Street Journal report, Whole Foods has been forced to step up promotions to compete for budget-constrained consumers with an increasing number of shopping options for natural groceries. The approach has worked for the chain, which attributed share gains and comp store growth in its 2012 annual report to steps it had taken to improve its price image. Those steps included a steady emphasis on the value of its store brands and coupons offered twice a month in its Whole Deal booklet.
A major point of emphasis in its recent Detroit store opening was the affordability of the items sold in its store. Co-CEO Walter Robb has expressed in numerous interviews that Whole Foods was committed to making itself accessible in communities such as Detroit and New Orleans where it previously did not operate stores.
"We try to be competitive with our prices. I made a personal commitment on behalf of the company for us to be affordable," Mr. Robb told Marketplace when Whole Foods opened in Detroit. "This market has some special pricing because this is a different market than we usually serve."
Beginning in 2010, according to the Journal, Whole Foods began offering one-day sales on select items. It has increased the number of these flash sales this year, using Facebook and Twitter to reach out to shoppers.
As early as February this year, some were questioning whether discounting would eat into Whole Foods’ margins. While it has not made a significant dent up to this point, Mr. Robb said it is possible that margins could be affected going forward.
An even bigger concern addressed in the article is that shoppers could become accustomed to the discounting activity and be trained to purchase only when items are on sale, as they have in conventional grocery segments.
- Whole Foods’ Battle for the Organic Shopper – The Wall Street Journal (sub. required)
- Has Whole Foods Dropped Its Prices Too Low? – RetailWire
- Will Whole Foods Be a Hit in Motown? – RetailWire
- Whole Foods CEO: Detroit is a long-term investment – Marketplace
Are the steps taken by Whole Foods helping it to get rid of the “Whole Paycheck” moniker? Do coupons and one-day sales make sense for the chain? Where do you see the biggest threats to the continued growth of Whole Foods?