Will Flash Sales Help Grocer Lose ‘Whole Paycheck’ Label?

Discussion
Aug 23, 2013

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.

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?

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12 Comments on "Will Flash Sales Help Grocer Lose ‘Whole Paycheck’ Label?"


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Steve Montgomery
Guest
8 years 9 months ago

To be aware of Whole Foods flash sales, a consumer would have to either already be one of their customers, a friend on Facebook, or follow them on Twitter. That indicates that they would already be at least an occasional customer in one of their locations.

If they were a new customer who somehow heard about the sale, they would quickly be exposed to the pricing of the rest of the store. Then with the sales only being for one day, I don’t see this campaign being effective at attracting new customers or lowering Whole Foods’ price image.

David Livingston
Guest
8 years 9 months ago

Whole Foods has had a store in New Orleans for as long as I can remember. That’s not a new market. As far as shedding the ‘Whole Paycheck’ moniker, I would say keep it. They didn’t get to where they are today by being cheap. Whole Foods is an expert on being on two sides of an issue at the same time. Prices, health insurance, lobsters, CEO pay, etc. Whole Paycheck is the successful business model. A flash sale on something occasionally will not change that.

It will be a few years before Whole Foods has any threats on its growth. Plenty of high income, big university, small markets remaining. Great company. Where else can a CEO make millions of dollars with a $1 a year salary? Or stop selling unprofitable items and claim it’s for humanitarian purposes?

Gene Hoffman
Guest
Gene Hoffman
8 years 9 months ago

Once bitten by a moniker snake, the scars remain. But when operating very good stores that offer “psychic income” and uniqueness to its targeted customers, the question could then be: Who cares?

Lee Peterson
Guest
8 years 9 months ago

My guess is that anyone who says “Whole Paycheck” is either not a WFM shopper or has not been to a store in years. I would stack the 365 label up to anyone else’s in terms of price and especially in terms of quality. Very competitively priced. Where they get dinged is the fresh goods, but there’s always multiple choices.

The question I don’t think most consumers actually think about is this, “what’s more important than what you put into your body?” If the answer is iPhones, Xbox and gambling in Vegas, well, you have to question the logic.

Karen S. Herman
Guest
8 years 9 months ago

Using social media to promote coupons and one-day sales is a smart marketing strategy especially to reach Millennials who are highly mobile and will visit a nearby Whole Foods on short notice. They will also spread the word to friends and family.

Whole Foods is giving back a little to its loyal customers and that’s a strategy that always seems to work. The company doesn’t want to lose followers to other specialty grocers, like Fresh Market, that are using social media in a similar manner.

Ed Rosenbaum
Guest
8 years 9 months ago

Whole Foods will not lose the “whole paycheck” reputation no matter what they do. It is not going to happen. Maybe they should take a different route and become the chain one shops because of excellent customer service or what ever they choose to become, besides expensive.

Robert DiPietro
Guest
8 years 9 months ago

First thing whole foods should do is zone price. It sounds like they are doing that in Detroit, but from my local shops it appears to be one-offs.

I’m not certain that coupons make sense at Whole Foods, but I do believe flash sales and aggressive private label value compare will help.

I think they do a good job alert customers via social media as well. Early this week they promoted a rotisserie chicken special at a very sharp price.

Lee Kent
Guest
8 years 9 months ago

People either love Whole Foods or they don’t. The ones who love it do not think they are spending their whole paychecks. They go there for what they want and shop elsewhere for other things according to their own budgets and desires.

Throwing a flash sale every now and then could be a good thing for WFM as long as it is profitable, but will it change the perception of who they are? Not so much, and I hope not. What it could do, if they are flashing on check-in apps like Foursquare, is perhaps reach a new customer. (Using Facebook would mean that the consumer is already on board, now wouldn’t it?)

That new customer is going to drop in for the sale and decide for themselves what WFM offers that appeals to them and at what value. That, my friends, will determine if they come back! IMHO

Ed Dennis
Guest
Ed Dennis
8 years 9 months ago

The biggest threat to the future of Whole Foods is listening to its critics. The format is successful because Whole Foods seems to have shunned consultants and conventional marketing gurus. The have built a reputation for delivering products that meet the criteria their customer base wants. As they have relatively few stores, their expansion is unlimited at this time.

Stick with your principles, source the very best and let those complaining about pricing go elsewhere. You will attract a lot of traffic just by keeping price shoppers out of your store and parking lot. Don’t let the failed marketers, pundits, and competitors talk you into changing your format. Price is not a problem! Be very satisfied with the segment of the buying public that you own. Keep them happy and work on satisfying more of their needs. You might consider developing the “Whole Foods” brand and offer you brand for sale in other retailers. It my be that the brand is more valuable than the retail enterprise.

Craig Sundstrom
Guest
8 years 9 months ago

I’m with David on this; you don’t see Saks or Bergdorf’s worrying about shedding their upscale image, why should WFMI? (Okay, okay; there ARE differences between food and footwear, but there are still upscale companies in every industry.) And in reality, the claim that “Whole Foods want’s to shed its ‘whole paycheck’ reputation” didn’t come from them, it came from the Journal. But I don’t agree with the latter’s assessment: it sounds more like a refining of a core strategy than developing a new one.

Li McClelland
Guest
Li McClelland
8 years 9 months ago

In a relatively short time, Whole Foods has been able to carve out a readily identifiable and quite special space in the areas and neighborhoods in which it operates (and where the demographics fit). Its regular customer base may be on the small side nationally compared to other grocers, but it is a very loyal and committed and knowledgeable one.

Whether we on the outside view Whole Foods’ desire and efforts to grow as smart, as trying to mess with success, as being greedy, or as being unduly influenced by critics and money men, Whole Foods should be very, very cautious about discombobulating their existing customers and their expected shopping experience.

Martin Mehalchin
Guest
Martin Mehalchin
8 years 9 months ago

I shop at a bunch of different grocery stores including Whole Foods. As part of their existing base, I’ve noticed the emphasis on value pricing with the store brands and it’s raised their share of my wallet.

All that being said, I don’t think this strategy will change the perceptions of non-customers or infrequent shoppers. The “whole paycheck” moniker is too ingrained and it will take a lot more to change that. As other commenters have pointed out, taking those further steps would probably be a case of the cure being worse than the disease.

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