FD Buyer: Whole Foods – Retailer of the Year

Discussion
Apr 22, 2011
Warren Thayer

Through a special arrangement, presented here for discussion
is a summary of a current article from Frozen & Dairy Buyer magazine.

Whole
Foods Market is our Retailer of the Year for so many good reasons
it’s hard to know where to begin. I’ve always been a huge fan of
the company because it is truly "the consumer advocate," having earned
the trust of its loyal shoppers by genuinely looking out for their interests.

One
competing retailer said Whole Foods has proven to be a "game changer" in
the retail food business.

"They have become the national brand for products that people believe
are better for you: organics, natural, HBC, wellness in general, fresh seafood,
etc.," the
competitor said. "They charge a premium and they have taken a lot of heat
for their prices. It is interesting to note that in most cases I have observed
they are less expensive than many of the independent or small chains of organic
retailers — which, when you think of it is really their competitor, not traditional
retailers."

The competitor added that similar to the impact Walmart has
on the industry, when Whole Foods says it will not buy a certain product or
products with certain ingredients, it sends a ripple through that entire supply
chain.

"I think they have a stronger loyalty from their customers than almost
any food retailer in the country," the competitor adds. "I also think
this loyalty is based upon the ‘trust’ that their customers have
in them to provide the type of foods/products that they are looking for. Their
customers even seem to like it more when they move toward a more ‘militant’
stance. The wellness/organic/natural consumer is a real challenge to fit into
traditional demographic profiles. They have participants in every demographic
segment. Their customer is just as likely to be a high-income person driving
up in their Mercedes as it is to be a young adult riding a bike and spending
a third of their limited income on the products that Whole Foods provides."

"As industry observers, we stand back and say Whole Foods is way too
expensive for the average household, their products are too specialized, or
that they will get customers for some things not available elsewhere but they
will not get customers to buy a full basket," the competitor concludes. "To
all of us with that perspective I suggest two things. First, spend more time
in their stores to see how wrong your basic assumptions are. (Careful though,
you likely will see some of your customers and you need to be prepared.) And
second, go ahead and move into the 21st century — consumers are loyal
to themselves first and then loyal to the retailer that allows them to be loyal
to themselves."

Discussion Questions:  What’s behind the strong loyalty so many of its shoppers have for Whole Foods? What tactics and strategies can mainstream supermarkets use to compete better with the chain?

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10 Comments on "FD Buyer: Whole Foods – Retailer of the Year"


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Ryan Mathews
Guest
10 years 24 days ago

What’s behind the success of Whole Foods? In a word — community.

While other food retailers scramble for customers, Whole Foods opens its doors to a seemingly ever increasing number of people who want to become citizens of the Whole Foods nation.

Shopping at Whole Foods isn’t about transactions, it’s about re-establishing one’s identity, a simple demonstration of values ranging from concern with self and family to the planet.

You can’t compete with this kind of appeal by introducing an organics section. That’s missing the point.

It isn’t about the products at Whole Foods. It’s the customer identity and community Whole Foods has built around those products and community building is a delicate — and difficult — art.

Max Goldberg
Guest
10 years 24 days ago

Whole Foods offers customers a wide variety of products that are perceived to be good for you, are leading edge and can’t be found in other stores. They wrap these products in a unique in-store experience, and top it with a strong commitment to customer service. Mainstream supermarkets, with rare exception, can’t compete with this.

Whole Foods is not for everyone; mainstream markets are. Whole Foods carries many products that would never have the chance to appear in mainstream markets. Whole Foods makes money by moving products out the front door; mainstream markets make money by bringing products in the back door.

Whole Foods, like Trader Joe’s, occupies a unique niche in retail, one that I don’t see mainstream markets successfully challenging.

Camille P. Schuster, PhD.
Guest
10 years 24 days ago

Whole Foods has a distinctive position. Whole Foods targets consumers concerned about “healthy” food regardless of age or sex or ethnicity. Whole Foods understands these consumers, offers products and services they want, offers innovative products and services for these consumers, and creates a shopping experiences they like. As Ryan said, introducing organic foods into your store does not take away from Whole Foods’ competitive advantage. Their competitive advantage does not come from a particular type of product. It comes from the whole package of understanding and appealing to their consumers.

Richard J. George, Ph.D.
Guest
10 years 24 days ago

Why is Whole Foods so successful? Simply stated, it has developed a strategy that goes beyond satisfaction of its target market, namely shoppers seeking healthy products from a concerned, committed retailer. Its positioning is clear, distinct and desirable: offering the highest quality natural and organic products. Beyond the product offerings, the organization has made significant contributions to sustainability. See its website for how to eat green during earth month. In addition, from its own workers to its suppliers, it has demonstrated caring and concern for their well being.

The advice to other mainstream retailers: Stand for something which is uniquely beneficial to a target group of customers.

Gene Detroyer
Guest
10 years 24 days ago

Dr. George says it all! “The advice to other mainstream retailers: Stand for something which is uniquely beneficial to a target group of customers.” That is good advice to every marketer.

Mainstream retailers can’t and should not take on Whole Foods. But, they should find some position and most of them have no idea what that means.

Ralph Jacobson
Guest
10 years 24 days ago

A smaller, but compelling additional example of this “Community” grocer is Trader Joe’s. They have capitalized upon social interaction both online and offline with an amazingly-detailed promo flyer that brings the foods and the food stories to life like few others do. Main stream grocers could do the same but the simplicity is not easy to replicate. Some feeble attempts have been made, however, I believe the more market share that gets eroded from mainstream grocers, the better those grocers will get at the community piece.

Lee Peterson
Guest
10 years 24 days ago

Simple: Whole Foods has nailed the “why” of their existence. Their mission is to improve the food quality and understanding of food quality absorbed by the average American: Whole Foods. I get it.

Everyone talks about Apple, but I truly believe that Whole Foods is THE retail emulator. Every single iota of their experience is fantastic, and they actually can make a difference in people’s lives vs. just bringing out cool new gadgets.

and if for a second you think WFs is a ‘trend’, look at how their numbers popped back up during the recession. This is the strongest brand in the U.S. right now, without a doubt.

Matthew Keylock
Guest
Matthew Keylock
10 years 24 days ago

As the article describes, focusing on demographics is largely obsolete. Different customers have different priorities and these transcend traditional demographic groups.

Whole Foods has shown that the natural/organics/wellness choice trumps any other motivation including price for a growing number of households even in today’s value-centric environment. They continue to keep their concept evolving for this group of customers to maintain a relevant and rewarding shopping experience.

This highlights the importance of really knowing and focusing on your loyal customers and using this knowledge to drive effective management of the brand and disciplined curation of the retail experience.

It’s great to be able to see this so transparently. It seems so many businesses lose sight of these essentials in the haze of product and financial management.

Cathy Hotka
Guest
10 years 24 days ago

Remember the sterile boxes and cans in the supermarkets we grew up with? In contrast, Whole Foods is the Disneyland of food, a celebration of all that tastes good. It involves its customers with the tastes and textures they buy…and once customers have seen that they won’t go back to sterility!

Ed Rosenbaum
Guest
10 years 24 days ago

Yes, Whole Foods is a market changer. Yes, Whole Foods has a broad following. Yes, that following is in the upper third of the economic stratus. Yes, Whole Foods is expensive. It is worth the cost if you can afford it. If not, there is nothing wrong with shopping at the traditional marketplaces.

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