Whole Foods Facing Turf War With Mainstream Grocers

Via AgWeb:

http://www.agweb.com/article/whole-foods-shareholder-said-planning-push-for-changes-sale-blmg/

"Whole Foods’ poor inventory and vendor management, high costs and failure to make the most of its unique appeal to millennial shoppers among the key issues…Larger mainstream grocers, including Kroger Co. and Wal-Mart Stores Inc., continue to advance on Whole Foods’ organic turf, weighing on sales. Kroger has a market value of about $29 billion and Wal-Mart is valued at about $214 billion. Whole Foods is trying to fight back by offering more discounts and starting a new chain aimed at younger shoppers. Organic products have become widely available at U.S. stores, often at lower prices than Whole Foods offers. Analysts have since questioned whether there’s capacity for more high-end organic grocers in the U.S."

MarketWatch did an interesting comparison of products and prices here.

I wonder what really motivates Whole Foods customers?....is this a true preference for taste and quality, or how much of this is actually driven by misperception and fear?

As the article says..."Larger mainstream grocers, including Kroger Co. and Wal-Mart Stores Inc., continue to advance on Whole Foods’ organic turf, weighing on sales." The kind of snake oil  marketing that firms like Dannon and Chipotle engage in has probably been a major driver of this fear and Kroger and Wal-Mart are exploiting the fact that now consumers are economizing on the fear and misconceptions that may have previously driven them to stores like Whole Foods.

Perhaps if Whole Foods can trim margins via better supply chain or inventory management (as suggested in the article) that will help with pricing more competitively. It seems like they may also need to capitalize on some other source of differentiation in products or services. I don't see food fads and fears going away anytime soon unfortunately.

See also:

Modern Sustainable Agriculture 

Monsantophobia

The Twisted Economics of Local Food