Despite high price concerns often cited in purchasing behavior for the demographic, Whole Foods Market last week said the company is gaining market share against other supermarkets partly because it is reaching Millennials.
"We don't exactly know why that is," John Mackey, co-founder and co-CEO, admitted in the Q&A session of a Whole Foods conference call last week for its third quarter ended July 1. "We can speculate on it somewhat that ... a lot of (Millennials) grew up eating Whole Foods because their parents began it. So they're already familiar with natural/organic food. So it's not as big a transition for them."
He added that the Millennials also "line up well with our philosophy and our purpose-driven aspects for our company."
The comments came after Whole Foods delivered another stellar quarter, marking three straight year-over-year comp increases over eight percent. Transaction count climbed seven percent in the period. The performance prompted an analyst to ask which demographic from an age and income perspective was driving the traction.
Besides Millennials, Mr. Mackey said Whole Foods is clearly converting more Boomers into customers because they're aging and looking to "stay young and healthy and vital and extend their longevity, so that's a natural push for them."
Relative to Boomers and Millennials, Whole Foods is lagging somewhat with is Gen X. However, Mr. Mackey suspected that as Gen X ages, "they will begin to turn more to Whole Foods as well. So we're bullish on all three demographic groups."
Walter Robb, co-CEO, also noted being much larger, Millennials will naturally have a bigger impact than Gen X. At the same time, he stated that all age groups are helping to push up the chain's high transaction rate. "Seventy-five percent of the growth here is transaction count — new customers, new trips. And it's exciting to see. So you have to believe the X-ers are coming in, too."
Mr. Robb earlier in the presentation said that Whole Foods' efforts to reduce key prices to improve its "relative value positioning" was helping drive "continued sales momentum" since the early days of the recession. He added that its competitive survey indicates that the chain improved its pricing position versus competitors during the quarter.
He concluded his formal comments, "We will continue to gain market share through further differentiating our shopping experience, improving our relative value proposition and reinforcing our standing as America's healthiest grocery store."
To what degree do you think Whole Foods' efforts to improve its "relative value positioning" as a factor in its recent success?