A Whole lot of trouble

Last Modified: 14 Aug 2008
By: Felicity Spector

Can American store Wholefoods rebrand itself as a bargain basement? That simply doesn't add up.

In tough times it's the little luxuries people feel they can live without. Organic food is right up there near the top of the list; the economic downturn is hitting the high end supermarket chain Whole Foods especially hard.

Today, news that it's cutting some 49 corporate jobs in Austin, Texas - around eight percent of the total workforce there.

Last week the company revealed its third quarter profits had fallen by 30 per cent - sending share prices to their lowest level for a year.

It's having legal troubles too. After an appeals court decision over Whole Foods efforts to buy up its rival Wild Oats Markets means a federal anti-trust investigation can now be re-opened.

Then on Monday, another embarassment: the chain was forced to recall consignments of minced beef after several customers fell ill. Just the kind of thing that could threaten its reputation for ensuring top quality produce, in exchange for top prices - forcing a company pledge to make sure its suppliers were up to scratch.

So, the store is desperately trying to rebrand itself - away from that 'Whole Paycheck' image - depicting itself as some kind of value store for the blue state masses.

Its latest initative, according to the New York Daily News is something called 'free value tours' - where staff lead bargain hunters around the store pointing out special offers and reduced prices.

From own brand goods to bulk-buy granola, some prices are cheaper than the competition, says the store. And if shoppers use coupons from its weekly flyers, they can spot the special deals.

But is this enough to transform perceptions of a store which has also just opened a specialist 'rock sugar bar', sells a goats cheese for forty dollars a pound, and where a lunchtime salad can diminish your wallet faster than a tank full of petrol?

Even 'man of the people' Barack Obama's noticed. As he queried in Iowa last summer: "Anybody gone into Whole Foods lately and see what they charge for arugula? I mean, they're charging a lot of money for this stuff."

There aren't any Whole Foods Markets in the Hawkeye State, of course, but that's a moot point.

There is always a silver lining: the smaller specialist food stores, delis and farm shops are fighting back, proclaiming they're the best places to buy local - and seasonal food.

As the Guild of Fine Foods' Bob Farrand points out: "You'll eat better, and often cheaper, and you'll help sustain the small food and farming business through what promises to be their toughest test yet."

And perhaps it's small businesses which need our loyalty more than the massive chains. Whole Foods has been around for almost thirty years, after all.

As the store that could once do no wrong, it's expanded rapidly across America and abroad, acquiring the UK's 'Fresh and Wild' and opening a gleaming new concept store in the heart of London's Kensington.

It's lost a massive ten million pounds in its first year of trading - which sounds bad, but compared to many of its competitors - overall - the company is actually performing pretty well in this most challenging of economic climates. But rebranding itself as a bargain basement? That simply doesn't add up.

This week's beef recall ought to flag up the potential risks of diluting what must be its strongest image: quality. Right now, that forty dollar goats cheese probably won't make it onto the shopping list.

But if Whole Foods isn't about good, high quality produce, fresh,safe ingredients, and, OK, the odd little luxury on the side, it could be in danger of losing sight of the core values which made it a shopping destination in the first place. And that wouldn't make a Whole lot of sense.