Whole Foods tackles ‘negative narrative’ with national campaign

In an effort to boost traffic and help eradicate its "Whole Paycheck" image, Whole Foods last week announced plans to launch its first-ever national marketing campaign.

The campaign, to launch this fall, isn’t intended to "drive short-term" sales or traffic but "be focused more on our differentiation, our values," as part of a long-term branding emphasis, said co-CEO John Mackey on its second-quarter conference call with analysts.

"We’re trying to advertise who we are," said Mr. Mackey. "We’re trying to change what we think is a negative narrative about our company. And we’re trying to be very clear what makes Whole Foods Market the unique special better company that we are."

The campaign comes after the grocer missed on same-store sales in the second quarter and lowered its outlook for the fourth consecutive quarter. The shortfall was blamed on ongoing price cuts, cannibalization, and new competition. Investors have been concerned about mainstream grocery discounters like Walmart expanding their natural and organic ranges.

"Natural and organic products are increasingly available, but no one does what we do," said Walter Robb, co-CEO, on the call.

whole foods meals

The campaign will highlight that Whole Foods is "the leading retailer of fresh, healthy natural and organic foods, offering the highest quality standards and an unparalleled shopping experience." It will tout transparency around products, including its 5-Step Animal Welfare ratings in meat, Eco-Scale ratings for cleaning products, sustainability ratings in seafood, and GMO labeling. This fall, a Responsibly Grown rating system arrives for produce and flowers.

But the overriding message will be highlighting "both our value and our values" that management implied isn’t being heard.

Further investments in pricing are planned this year but some analysts appeared disappointed they won’t be featured in the campaign. That’s partly because promotions are set on a local rather than national basis. Management admitted it’s been challenged getting the competitive pricing message out there.

"Even though we’ve been doing the value investments for a while, particularly with our 365 line … we’re still in the early innings of really learning and growing in how to do this," said Mr. Robb. "We recognize that we can do a better job communicating to the customers."

BrainTrust

Discussion Questions

Does Whole Foods need a national branding campaign? What messages should the campaign embrace? How should the chain be getting the word out about its price reductions?

Poll

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Max Goldberg
Max Goldberg
9 years ago

For many consumers Whole Foods has an image problem. While consumers like the stores and what they sell, they feel that they cannot afford to shop there. Whole Foods is not going to ever be a mainstream market, but they can take steps to attract more customers. A national advertising campaign can position the brand as more than just a high priced, organic grocery store. It can tout the company’s values and can point to consumer value without resorting to typical grocery ad/pricing campaigns.

Contrary to what store officials say, it is possible to tag national spots with local pricing messages. But I question the need for Whole Foods to play that game—a game it will rarely win.

Instead they should focus on quality, unique selection, great customer service and overall value (in terms of the health of your family).

Zel Bianco
Zel Bianco
9 years ago

“It couldn’t hurt” as they say in New York. I think most shoppers understand that you will pay a premium for many items at Whole Foods but that the price is worth it for the quality and freshness of the product. Some of the prices on fish, for example, can be ridiculous, yet the prices on meats are very fair.

A container of strawberries that can cost $2.50 at other “fresh” type supermarkets like Fairway will cost $5 at Whole Foods.

I do not see Whole Foods placing circulars at the entrance to the store, but they do need to get the word out that many of their items are indeed reasonably-priced, and that some of the other items that are perceived to be expensive are worth the peace of mind they give you for being wholesome.

Hey, maybe that could be the start to a campaign; “Whole Foods is wholesome but it does not mean you have to spend your whole paycheck.”

Just saying.

Gene Hoffman
Gene Hoffman
9 years ago

Whole Foods has a great concept, but it is being duplicated by other good retailers offering lower costs to organic-focused consumers. Whole Foods can reduce its prices which will project an admission they were too pricey when there was little competition for their brand. But so what? They were doing what exclusivity allows and profiting and expanding because of it.

Whole Foods realizes that the bloom is off of its high-priced organic rose. Nonetheless they are still hanging in there at a neutral sales level. Branding may help, but time bears away all things with customers, even with the zealous organic food shopper. Whole Foods may have expanded too rapidly, but they should continue to be what they have always been and let any price changes be communicated by word of mouth.

Mohamed Amer
Mohamed Amer
9 years ago

A national branding campaign allows Whole Foods to begin a process of molding the brand’s image. The challenge the company has is that for current customers, they are very likely to be preaching to the choir and the Whole foods “value and values” campaign may fall on deaf ears for the general public.

Whole Foods is the leading champion of “fresh, healthy natural and organic foods” and any marketing they do has to push their own brand, but will also by extension be building a larger market for the organic food category (which will benefit competitors selling organic). So, their messages have to focus on further differentiators that speak to certifications, GMO labeling, etc. This entire package speaks to how one feels about and connects with the Whole Foods brand.

The price investments issue is more transactional and is difficult to include in the above messaging. It is not core to the brand image unless it is carefully subsumed under the value Whole Foods bring to the market (365 line).

Dr. Stephen Needel
Dr. Stephen Needel
9 years ago

We find lots of stuff at Whole Foods that is reasonably priced (not just their 365 line, which we like a lot). Why not a “great food doesn’t have to be expensive” pitch? Pushing the quality of their products is preaching to the choir—even non-shoppers probably believe they have good stuff.

Tony Orlando
Tony Orlando
9 years ago

Whole Foods does have great stores, and cannot compete with the massive discounters out there. None of us as retailers can be all things to everyone, and Whole Foods now has to deal with other stores going after their core business. The growth they once had achieved is no longer the case, as the organic boom is now in all stores, with private-label organics being discounted big time.

Consumers with money are shopping for sales like everybody else, and profits are getting harder to come by, so Whole Foods is trying to recreate their image, which I believe will do little to stop the slide. Outside of some protected pockets in cities where they shine, many start ups and other stores are entering into this healthy market concept, and Whole Foods is going to have to get used to reality like the rest of us, which is little growth, along with lower retails to sell their goods.

I think the message is to talk about the great experience Whole Foods offers, along with their 365 organic line, and remind the folks what a great place it is to find awesome foods, freshly-prepared, that can not be found anywhere else.

Slashing prices only works for so long, as the big boys will slash their prices to match and beat them all day long, so who wins? The customer, as always, and that hasn’t changed in 50 years.

Raymond D. Jones
Raymond D. Jones
9 years ago

Whole Foods has established an enviable position as the leading retailer of more natural and healthy foods. This is the value they provide to consumers.

As mainstream stores have begun to carry more of these types of items at lower prices, Whole Foods has been saddled with the image of being overpriced.

Whole Foods has made the mistake of allowing others to define its brand image. However, it is very difficult to negate a negative. Whole Foods should continue to focus on defining its brand in terms of its value as a leader in serving a key segment of the market with quality, assortment and a better shopping experience.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
9 years ago

Whole Foods has an image of great quality and organic products at a relatively high cost. Competitors, especially Walmart, are trying to compete with quality organic products at low prices. Promoting low prices is not going to work for Whole Foods. They do need to emphasize their values and mission. They may try good prices for the value and be strong on the value but competing on price is not consistent with their values.

Gene Detroyer
Gene Detroyer
9 years ago

Whole Foods is my wife’s go-to market. I asked her what she would think if Whole Foods started featuring price in their advertising. She immediately responded, “I believe they would start cutting corners.”

She shops there because she believes in what Whole Foods stands for. She believes she pays more because she gets better quality and—this is important—better trust.

Carole Meagher
Carole Meagher
9 years ago

Is Whole Foods’ size now its own enemy?

An affluent, liberal customer base prefers local and sustainable products, which points to shopping at small, independent grocers, specialty stores and farmer’s markets.

The thought of sending one’s money to Rick Perry’s Texas is also rather troubling. Wasn’t John Mackey also a big opponent of Obamacare?

Edward Chenard
Edward Chenard
9 years ago

Whole Foods doesn’t have an image problem, because an image problem implies that what people complain about is incorrect. But the nickname Whole Check is accurate. I happen to live in an area with many food coops and they carry the very same brands that Whole Foods does, but they charge a lot less. Even the big supermarkets are starting to carry more and more of what Whole Foods does, but without the premium price tag. And at the coops and even some of the supermarkets, I can see down to the farm or at least the town of where my produce came from. I never see that at Whole Foods. The local coops say they are organic and local and they prove it, where as Whole Foods doesn’t.

I used to work near a Whole Foods, and a few times my friends and I went there for lunch and we would end up at the hot bar and pay $20 for what we could get for half just going to Jason’s Deli across the street, which also was claiming to be organic and have high values in quality.

Last year I had the chance to talk to some of the leadership there. When I challenged them on some of the branding, I was told they are a lifestyle brand and will define that for the customers. I think they might want to re-evaluate that position. At least where I live, the number of choices we have for getting our food is plentiful, no one can afford to not adapt to the customer.

Doug Garnett
Doug Garnett
9 years ago

The mere description of the campaign suggests failure; suggests that Whole Foods has decided to tell us what they think instead of delivering actual change and value.

A recipe for wasted ad dollars.

In my experience, Whole Foods is very expensive, and you can’t fight accurate consumer perception of that truth. If Whole Foods wants to fight, then they need start offering better priced items. And then it makes sense to advertise those items—not waste their money on a brand campaign. After all, actions speak louder than words.

Ed Rosenbaum
Ed Rosenbaum
9 years ago

I do not think Whole Foods can change their image. It has been there too long. So maybe the answer is to push forward, stressing value over cost. Even if they do this, the campaign is going to be a long one. They might be better off doing what they are good at and letting the other dogs in the fight battle it out over price. No one can be all things to all people. Cater to the customer base they already have in place.

Tim Cote
Tim Cote
9 years ago

It makes no sense for Whole Foods to do a national branding campaign until they have something to talk about. In my market they have an excellent competitor, New Seasons, that offers a similar assortment with much lower pricing. No assortment advantage, a terrible pricing issue; nothing really to talk about in a branding campaign.

Ryan Mathews
Ryan Mathews
9 years ago

It needs something. Whether a brand campaign will work or not depends a great deal on the messaging and execution.

If I were Whole Foods, I’d talk about everyday value rather than price reductions and stress efforts like bringing food to central cities like Detroit.

Naomi K. Shapiro
Naomi K. Shapiro
9 years ago

I’m with Doug and Ed, above. You can’t eat quality, and other, similar stores, with reasonable-to-great quality are offering the same products at better prices. I am constantly shocked at how big companies (think Coca Cola, J.C. Penney, Whole Foods) with so many resources and such big budgets and presumably intelligent people making the decisions get it wrong. I think Doug stated it perfectly.

Warren Thayer
Warren Thayer
9 years ago

A branding campaign focusing on differentiators besides price is a good idea. Whole Foods is not going to win in a price battle; long-term, it would harm them unless they lower the bar on their product criteria, which, IMHO, would be a mistake. Mainstream supers like Kroger have done a terrific job with organic/natural. That’s going to accelerate, and unless Whole Foods can convince its targeted shoppers that they have something different/better that is worth paying extra for, they’ve got trouble ahead.

Phil Rubin
Phil Rubin
9 years ago

Whole Foods needs more than a national branding campaign, but that is indeed a start. It’s smart that they are not trying to compete on price (apparently), but part of their challenge is that not everyone shops at Whole Foods for the same reasons. Branding isn’t going to address each customer segment and the only way they do that is with talking directly with customers. It is astonishing that they haven’t yet begun to focus on direct customer relationships, especially with many of their stores serving very diverse segments of customers.

Lee Peterson
Lee Peterson
9 years ago

I have to step out of myself when we talk about WF because, to me, what’s more important than what you put in your body? A faster car? A 5000 sq. ft. house vs. a 4000 sq. ft. house? Lottery tickets? Cigarettes? Why would price be more of a driver than health, and maybe the health of your family? What’s the real cost of buying “cheap” food?

I think WF should spend a lot more time on their 365 brand. That brand hits the sweet spot of healthy and affordable, and can comp to just about anything in the traditional grocery stores. Yet, they make no big deal of its benefits. Make a big deal of it! Maybe even give the brand its own stores, or sections of stores. It’s really a well kept secret that deserves much more play, IMO.

I heard an expression the other day that bears repeating: “You can’t have a million dollar figure by eating one dollar meals.” ‘Nuff said.

David Livingston
David Livingston
9 years ago

I’m not so sure WF needs price reductions as part of its message. Where I live, the most expensive restaurants in the area are the ones with the longest lines to get in. Standards and quality messages are fine, but keep the high price image. Even if they cut prices 20%, they will still be the highest priced store in the market, so keep the prices high.

Larry Negrich
Larry Negrich
9 years ago

Whole Foods could spend carts full of advertising dollars to try to convince consumers that they really aren’t that expensive. But truthfully they really are expensive on many, many items. So step 1 is to get their target consumer to not compare head-to-head based on price. That can be hard in a commodity-driven environment.

So they need to alter the comparisons to steer consumers to look at the health-value of food. Admit that better food and groceries that are better for the consumer cost a little more. Would you pay a little more for good health for your family? Is your family worth a few extra pennies a day? I’d stay away from talking cost reductions in the macro. Target the promotions to move some traffic but keep focus on the “good life, healthy life costs a few cents more—and “your family is worth it” message.

Martin Mehalchin
Martin Mehalchin
9 years ago

Whole Foods’ decentralized model is great at creating locally relevant in-store experiences, but I do think it’s left opportunities for brand building on the table. It sounds like this national brand effort is designed to address that gap and the 365 line as well as their transparency programs (two things that WF does well but does not get enough credit for) are great places to start.

W.R. "Russ" McAfee
W.R. “Russ” McAfee
9 years ago

When officials from the USDA, FDA, BigAgra, and representatives from the food processing industry met with the three organic food industry CEO’s three years ago for a “conference”, it wasn’t for schnapps and hors d’oeuvres.

It was to discuss the now $37 billion-dollar-and-growing organic food industry built on a GMO-free organic food model/brand a successful strategy (though it only had 3-4% of the overall grocery market at the time) that was expected to grow annually; which worried the process food industry.

What came out of the meeting were “agreements” and “willing-to-co-operate” communiques. Which the processed food industry spun in their favor. Which was followed by “organic-industry-caved-in” headlines in a classic PR blind-side a public, partially true, guilt-by-association-where-there’s-smoke-there’s-fire public hatchet job designed to drive the first head-to-head wedge smack into the middle of organic industry’s growing market share.

An effective PR and marketing tactic. Called dirty tricks in politics.

By just showing up for the meeting, the organic industry opened their own door for it. The controlled media cacophony that followed planted and sprouted the seeds of obfuscation that now surround the organic industry, and that’s affecting Whole Foods bottom line.

By 2014, the processed food industry was responding with a flood of repackaged “organic” (but not non-GMO), “GMO-free” (but not organic because of pesticides/ herbicide uses used on fruits and vegetables), “all-natural” or “green” of “nature’s best” (neither GMO- nor pesticide/ herbicide-free) food on processed food’s grocer’s shelves.

Busy borderline shoppers began buying the above-labeled items.

The strongest option for the organic food industry imo is to brand their products (independently if need be) with certified GMO-free Organic labels. Get it on (or above) every food they stock and let the consumers continue to wage war on their behalf at the checkout counters.

The Internet and word of mouth will contine to inform consumers need.

Whole Foods should staff GMO inspectors like Germany and 60 other nations do that have banned these products to cross-check/certify/ verify every food item WF buys and stocks.

The GMO/Processed Food Industry will try to block this effort because it is the non-GMO (or GMO-Free) label that the GM industry fears most because they know it will successfully differentiate the organic industry from the processed food industry long-term. To date, they have spent more than $60 million to keep “contains GMO’s” or “GM products” off all food labels.
The question begs: Why? Why not let the consumer decide? Food is either genetically modified or it isn’t.

That’s the whole foods brand; their business model.

Pricing can be adjusted accordingly.

The market is still there.

What the process food industry did was take off the gloves and throw a sucker punch at the organic food industry.

Mike B
Mike B
9 years ago

A national advertising campaign is the wrong move for this decentralized retailer. How much does their customer even pay attention to the media forms they plan to advertise on? This is a sign they are losing touch with who their customer is, or are not even sure.

In Northern California, Whole Foods is routinely (much) cheaper than Raleys, Safeway, or Save Mart/Lucky on identical items on packaged goods and dairy. Don’t believe me? Go compare for yourself. The exception is on fresh products. The fresh item pricing at Whole Foods is WAY out of line and I think this is what creates such a negative customer perception on price.

I think the bigger problem is the ongoing expansion of others who attract the same customers, or similar customers. Trader Joe’s, The Fresh Market, upgraded/larger Kroger Marketplace format stores, regional operators like New Seasons, even Sprouts; all of these things are taking customers from Whole Foods. Most of them are doing it at a lower price point with quality that may not be quite as good, but is good enough.

Whole Foods may try to see itself as a natural/organic store but many people I talk to view it as more of a gourmet food store. I suppose customer perceptions vary by location. With their decentralized approach, allowing local or regional to control marketing, they can control these things. With a national campaign, not so much….