mallarde

Has Whole Foods Lost Touch with Its Customers?

I agree with the author. Well done. I think many of their prices have increased over the last couple years. Rather than phasing out items that became too expensive for them to buy and sell to customers, they just kept increasing prices.

The ones that come to mind are $30.00 per pound for dry aged beef. $30 per pound for beef? I could get an entree at a very nice restaurant in Los Angeles for what it would cost me to cook my own dinner.

Get a clue.

Great Deals at Whole Foods: What about the stock?

Alan, don't mean to be argumentative. I just am thinking this through and am not sure I am explaining my thoughts well.

I guess that for those looking for organic/high quality but that have to pay attention to their expenditures, Trader Joe's does better at stocking its shelves with affordable, interesting, healthy items. (No, TJ's does not have some of the high-end stuff.)

WMFI can try to compete with its 365 items, but I do not think that they are enough when compared to what TJ offers.

Personally, I will continue to use Whole Foods for meats and certain produce/vegetables. I am trying to find as much as TJ's as I can for purely monetary reasons.


On Aug 05 05:37 PM Alan Brochstein wrote:

> I bought the stock pre-market today and then sold it, too early (22.35).
> After they reported, I purchased stock below 20. My guess is that
> it pulls a COH or SBUX and has an ok day tomorrow.
>
> It is easy to find competitors such as the one you mention that can
> compete with PART of what they do, but they tend to either not offer
> one-stop shopping or don't have the service level that customers
> value as well. I disagree with you about value, and this is coming
> from someone who has been a customer for 14 years. We even buy our
> laundry detergent there. I NEVER thought that I would be able to
> buy a staple like that, but there are so many affordable staples
> that they do offer (again, higher quality than mass-marketed products).
> In this case, though, the per-use is both cheaper and better than
> Tide, etc.
>
> If I am wrong about WFMI, the stock will go up, because I will be
> eating a lot of the 365 beans!

Great Deals at Whole Foods: What about the stock?

I suggest the "cost" might be their entire business model. "Lower margins" is no small matter in the grocery business -- as you probably know.

A lot of what they are doing is pure marketing to convince consumers WFMI is affordable. Other parts may be real re-positioning. The problem is that they need to move towards a TJ emphasis on value. TJ kills them there. TJ knows where to find the stuff that is good and has value. WFMI's buyers seem less capable of this.

It will be fun to watch. Not an encouraging WSJ story today, but WFMI holds up.


On Aug 04 09:08 PM Alan Brochstein wrote:

> We can argue all we want about what people want, how much they are
> willing to pay for it, etc. Yes, there is clearly something cheaper
> at TJs and something better but more expensive at WFMI. I have been
> shopping at WFMI for 14 years and know the company very well as a
> customer. I don't shop there exclusively, and I actually prefer
> Central Market (owned by a great perhaps the best supermarket chain,
> privately held HEB). I have no bias one way or the other - I shop
> at Kroger, Randall's (Safeway), and HEB. I have always been fascinated
> by the grocery business. This much I can tell you - Whole Foods
> has moved even more towards the "value" orientation. They have always
> offered tremendous value in their 365 private label, and their prices
> on a like for like basis have always been somewhat competitive.
> Dave Y is correct in his assessment about why the company gets its
> "expensive" reputation.
>
> It is easy to think in just all or nothing terms and conclude that
> a grocery store that is high-end focused will suffer indefinitely.
> That rules out that most of us aren't losing our jobs, aren't facing
> soaring mortgage costs, etc. As I stated in the original article,
> I believe that a lot of bad is now priced into the stock. The company,
> in my opinion, has finally adapted to the tougher environment. While
> the cost is permanently lower margins, the company can still grow
> significantly over time.

Great Deals at Whole Foods: What about the stock?

The wild salmon is $30.00 per pound. See what I mean?

In my analysis (and shopping) I try not to get distracted by the really high end stuff alongside the 365 brand stuff. Still, I think it is priced well above TJs.

I have bought sushi for lunch at TJs -- at least as good at WFs but almost half as expensive.

Yes, much of the Whole Foods stuff is better. Some of it TJs does not even carry, like the high end meats.

But for more and more people, they will do without the really high end stuff and find healthy food at TJs for much less.

Personally, every once in a while I will pick up $20-$30 per pound fish to cook at home. But other than that I have no need to go into WFs anymore.


On Aug 03 11:06 PM Dave Y wrote:

> My shopping experience at WF is quite different . Forgive the grocery
> metaphor but comparing TJ to WF is apples to oranges. When I shop
> at TJ I spend far less than half my WF bill because they have very
> few things that I want. Virgil's Root Beer is consistently cheaper
> there (I'll give you that).
>
> I find the 365 wines just fine for my palette and pocket. The 365
> organic label and bulk items are the core of value shopping at WF.
>
> On these items WF can compare favorably with anybody.
>
> Yes, you will find wild caught salmon for over $20/lb. Again there
> is no comparison to farm raised salmon in most any restaurant.<br/>
>
> Just because WF carries a lot of ultra high end items they get the
> the prohibitively expensive label. We too quickly delude ourselves
> into thinking we can't afford food without pesticides, antibiotics
> and steroids. Our grandparents didn't settle for less. Why should
> we?

Great Deals at Whole Foods: What about the stock?

Alan, WFMI touts its price competitiveness with Trader Joe's. It is all a matter of "quality," which is subjective, but not subjective at the same time. I can tell you when I walk out of a Trader Joe's, my bill is about 50% of what it would be at Whole Foods.

Example: I stopped buying wine at Whole Foods. I could not find a decent bottle for under $15, which is way over the "everyday bottle" level for me. The 365 label bottles are not drinkable. At Trader Joe's, I found a delicious Bordeaux for $7. I bought 5 bottles of it.

Sure, in some areas Whole Foods has a better selection, and Trader Joe's can't compete in the meat department. But I have found some amazing cheeses at Trader Joe's that must be half as much as Whole Foods.

I think Trader Joe's is shrewder at selecting items with value.

$29.99 per pound for high grade salmon??? WTF? I'll go out to a fine restaurant in L.A. and get a salmon entree for that much. $10 for a small piece of Parmesean? Too, too much for me. And I thought I would never think twice about spending $ on food. If I am at my breaking point, there must be lots others.

WFMI morphed into a luxury brand. Can a large scale supermarket chain thrive as a luxury brand in a recession? We will find out soon enough.




On Aug 01 10:31 PM Alan Brochstein wrote:

> 2X as much? Sorry, the margins just aren't that great to be accurate.
> Are you saying that the same thing costs twice as much, or are you
> suggesting that the quality is such that the price points are higher?
> I don't believe that the dynamics have changed much on the competitive
> front - the 50% off price on WFMI is just a reflection of what the
> market didn't seem to realize a year ago. No, WFMI isn't a bargain
> because it has fallen 50%. It will take 4-6 years to get back to
> the 40s.

Great Deals at Whole Foods: What about the stock?

I am short WFMI and entered at the lows. I feel as though more and more WFMI shoppers will realize that they cannot continue to spend 2X as much as they would shopping at Trader Joe's or elsewhere.

Wish I had been watching WFMI much earlier, but I do not think the pain is over. Yes, I see they are trying to point out bargains at the stores, but this will be too little, too late.