Whole Foods CEO Takes Issue with Press Coverage
John Mackey, the co-chief executive of Whole Foods Market,
is upset with the press for referring to the chain as "Whole Paycheck."
According
to a MarketWatch report, Mr. Mackey believes the suggestion
that Whole Foods is high-priced is wrong and that the notion keeps consumers
out of its stores. As a result, the American populace is not as healthy
as it could be, he insists.
Mr.
Mackey pointed out that Americans pay a much lower percentage of their overall
income on food today compared to the past.Â
"People have the money in America to spend on food; it’s about
their priorities," he told attendees at The Wall Street Journal’s ECO:nomics conference. "There’s a significant portion of the population
that doesn’t want to keep eating crummy food, and they’re willing
to pay up for it."
Americans, he also contended, could save a lot more
money if they cut out all the unhealthy items sold in stores, his included,
it is assumed. A diet free from meat and loaded with whole grains, beans, fruits
and vegetables costs around $200 a month, according to Mr. Mackey, who is a
vegan.
Mr. Mackey, in response to a question from the audience, rejected the
assertion that Trader Joe’s was much cheaper than Whole Foods.
"They’re a limited-assortment store," he said. "Everything
you find at Trader Joe’s is a low price, where Whole Foods is a spectrum
of prices. That creates the image of Whole Foods being more expensive."
Discussion Questions
Discussion Questions: How would you say Whole Foods’ prices compare to other grocers? Do you think John Mackey has a point regarding Americans complaining too much about the amount they spend on healthy diets?
Last I checked, Trader Joe’s was significantly lower priced that Whole Foods. So were Ralph’s, Vons and Albertsons. If Mr. Mackey thinks that he can get Americans to cut costs by becoming vegans, he will be sadly mistaken.
Whole Foods is expensive. Yes, they offer a fantastic assortment of food and are supportive of local food companies. But with most Americans still feeling that the country is in recession, it will be difficult to turn around the public’s and the press’ perceptions that WF is not Whole Paycheck.
Me thinketh, John Mackey, thou protesteth too much. Whole Foods has a shrewd business plan focused on a healthy diet, has marketed it very well to a devoted and nearly zealous audience and priced accordingly–which means higher than most competitors. That has made Whole Foods register higher with Wall Street than other food retailers. Kudos, John.
All Americans want to be healthy and they want to think their diets will allow for that. Denial is frequently called upon by all of us. Americans also complain about almost everything including higher prices and what foods they should eat. That, of course, doesn’t make their complaints right, or wrong. It’s frequently just an outlet for other grievances. So let us complain about how much we have to spend on healthy diets and go about keeping Whole Foods rolling. Stay cool, John.
Healthy food typically costs more–one reason that obesity, heart disease etc. are more prevalent in lower-income populations, who are more likely to buy relatively inexpensive high-fat, processed food. Some of this cost differential is undoubtedly legitimate but retailers like Whole Foods do need to look at their pricing models if they want to avoid criticism.
Why is he complaining? The Whole Paycheck image has been good for Whole Foods. I think a lot of people shop there because it is more expensive and people feel they are getting better quality.
Who said that all groceries are supposed to be inexpensive? A BMW costs more than a KIA for good reason. All the more power to Whole Foods for being able to differentiate themselves from the pack of “more-of-the-sames.”
I’m based in Canada and there is a Whole Foods around the corner from my home. Most of our groceries come from there. Yes, the grocery bill is more expensive than if I shopped at one of the other grocery chains. But, I get better “total value” in my opinion. And, isn’t that how retailers, both high and low end, win the game? Would we rather they be just another boring grocer?
In the pursuit of shopper segmentation, differentiation from competition, and unique shopping experience; not many retailers have done as well as Whole Foods. Does it have detractors–sure. However, on the whole, they are doing things correctly. They have responded to the recessionary economy with some “hold the line on pricing” products and are not selling to the “bargains first, foremost, and only” shopper.
I am suspecting Mackey’s comments are directed at those OUTSIDE the industry who have never experienced the Whole Foods’ stores and are staying away based on a perception that is fueled by the opinions of others and not their own shopping trips. Perhaps it is his attempt to get those people in the stores and allow them to experience the perceived benefits?
I can’t quite recall the exact phrase but here goes. You can’t expect high quality products at a low price. So let’s move on to the next topic. Trader Joe’s and Whole foods are competitive in that they give us options to select from that the traditional grocery chain does not.
I think if Mr. Mackey and other Whole Foods executives were more open with the press, they would have more opportunities to present their points of view in a wider variety of public forums and, in the process, better able to combat negative stereotypes. Right now, the company routinely refuses to speak with the business/trade press and it is paying the price for that wrong-headed policy. It somehow doesn’t understand that silence can be seen as arrogance, nor does it realize that reporters for major business media often start their research on stories about the company by calling the trade press reporters who they assume will know the company best and asking for their insights. We at PLBuyer routinely field calls from reporters at a wide range of media outlets asking us about private label issues and various retailers. I think any PR professional worth his or her paycheck would be telling Whole Foods to change its attitude toward media coverage. Until that happens, I would say to Mr. Mackey as you sow, so shall you reap.
John Mackey is absolutely correct in this instance. “Whole Paycheck” (“Whole Paycheque” in Canada) is a tired, worn-out cliche that you can find in the online comments section of just about every newspaper article ever written about the company-and usually, it’s clear that the person posting the comment thinks it’s the most funny and original thing ever written, a thought unique to himself. Journalists who use it as the lede in their articles are guilty of extreme laziness.
On national brand natural CPG, WFM generally has the same price as its local natural/organic competitors, and I can think of a few items I buy that are cheaper at Whole Foods than elsewhere. Comparing WFM’s national brand CPG prices to conventional supermarkets, I usually find WFM to be significantly less expensive than my local Kroger or Safeway.
Their “365” private label program is best-in-class; WFM shoppers know that it’s just as good as any national brand, and they buy 365 products confidently, while saving money doing so.
Yes, their perishables can be more expensive, but WFM has evolved quite a bit since the beginning of the recession, and has figured out how to be promotional in these departments. You don’t have to buy the most expensive items in the meat and seafood cases.
But conventional wisdom is always easier to base an article on than actually doing the research, isn’t it?
(No, I’m not “rahodeb,” but yes, I work for a company that is a vendor to WFM, and I follow news stories about it very closely.)
I am of two opinions here: I think Mr. Mackey’s claims are for the most part correct, but it seems every time he opens his mouth it’s a PR disaster. Sometimes it’s probably because he’s misquoted, sometimes the thinking is perhaps a little too nuanced to be well understood (i.e. “we’re not more expensive, we just sell a lot of high-priced items”) and sometimes he just tells us things we just don’t want to hear. Perhaps having sworn off animal products, he can swear off public speaking (at least for a year or two).
John Mackey is correct–good, whole foods cost money and as other have said – low price and high quality are comparable…. And indeed, Americans do spend much less than say the French or the Japanese, so in that sense an increased food budget resulting from shopping regularly at Whole Foods would not be truly profligate.
That said, Whole Foods does not have the most competitive pricing structure nor if anyone is aware of the RENT they pay for their stores is their operating cost well managed in comparison to some of its competitors. And one can make direct comparisons between Whole Foods and Trader Joe’s–TJ’s will always have lower prices, significantly lower prices.
So while I agree with John Mackey and support his mission for a ‘healthier America’–I do believe his company could be a bit more efficient and provide a ‘better deal’ to its customers so more consumers could afford the best in food.
So let me get this straight–Taco Bell would have us believe that their ultra cheap menu items are actually made with high quality ingredients while Whole Foods wants us to believe that their high quality products are actually cheap… interesting.
Whole Foods is reasonably priced? Uh, no and they couldn’t be because they offer a better product that in-turn is more expensive. Whole Foods shouldn’t be complaining and consumers shouldn’t be surprised that quality costs. If Whole Foods was really concerned about the citizenry and how they eat, he should tell them to start their own garden.
Why is this a story?
I teach marketing to undergrads and, for the last three years, every year I have them run a survey comparing prices at the local Whole Foods and the vastly more popular supermarket chain Giant Eagle. Every time, we have found that Whole Foods is _cheaper_ than Giant Eagle on almost all items that they both stock. However, average prices are higher at Whole Foods because it has much higher quality in general. That leads to the perception that it is expensive, and most Giant Eagle customers we surveyed don’t even venture into Whole Foods for that reason.
Moreover, as someone else pointed out, their private label 365 is very reasonably priced. I completely disagree with the Whole Paycheck label–it is a clever but silly name that has stuck.