Challenges Ahead for Whole Foods

Before the ink dried on Amazon’s acquisition of Whole Foods, market watchers were looking for signs of change and possible trouble ahead. Forbes reported that in a recent speech, Whole Foods CEO John Mackey said the “marriage” to Amazon has been “challenging.”

According to the report, Morgan Stanley’s Brian Nowak is still cautious about the future of the upscale grocery chain, telling clients that “Whole Foods’ average food-item price was approximately 14 percent higher than the average grocery store.” He also cited a recent survey showing 70 percent of consumers didn’t shop at Whole Foods because of high prices.

Post-acquisition surveys show consumers had more positive perceptions of the chain and possible price drops, yet challenges remain. The banner’s lower-priced Whole Foods 365 concept stores are stalled, with one of its five stores already closed amid inconsistent pricing and store inefficiencies.

So far, Whole Foods’ remaining strength is offering high quality food and prepared food innovations like a 4-foot-wide mac-and-cheese bar with different varieties, including pulled pork and vegan mac and cheese. On the Amazon side, the brand is known for high value and optimum efficiencies and continues to be the leader in sending non-perishables to customers overnight. The jury is still out on how these two retail strengths will influence each other.

Grocerant-Ready Ideas:

• Consistency with value pricing, such as daily or weekly deals
• Headline-making programs like mac-and-cheese bars
• Enticing deals like “free prepared food side dish for every $XX spent in the produce section”