oysters for $1. A $2 off Tuesday rotisserie chicken. Price reduction to 25% of its assortment. Breaking with its “wholesale wages” reputation for high prices, luxury grocer Whole Foods has slashed prices on many of its grocery items this year in a concession to the punishing toll that high food inflation has taken on shoppers, even even those in the middle and high. middle class that frequents her emporium.
In that sense, Whole Foods is taking a page from the playbook of less daring rivals like Walmart, Aldi and Kroger, which also offer shoppers deals. Food inflation has spared Americans little: With food prices rising 22% since 2021, spending on food at home accounts for a larger share of Americans’ discretionary spending than it has in 30 years.
“It seems like customers are gravitating toward where they think the best deal is right now,” says Whole Foods CEO Jason Buechel, who joined the company in 2014 and became chief executive in 2022.
Whole Foods shoppers are even trading down on less expensive items or opting for Whole Foods’ “365” store brand items, he says. Such trends have continued even when inflation has cooled. As a result, Whole Foods, with more than 500 stores in the US and plans to open 30 new ones each year, cannot afford to alienate any customers.
Cutting prices is harder than it seems
Cutting prices isn’t easy for the grocer, Buechel says. For example, Whole Foods’ quality standards and animal welfare rules (such as selling only cage-free eggs) give it fewer suppliers to choose from.
Amazon, which bought Whole Foods in 2017, did not break out Whole Foods’ revenue in its results. But the grocer makes up the bulk of the tech giant’s “physical retail” segment, where revenue grew 6% last quarter, outpacing rivals such as Kroger. Whole Foods’ annual revenue is about $20 billion.
Whole Foods’ prices remain out of reach for some families, Buechel says, but its new deals are helping to “democratize” healthy grocery shopping in the U.S. for those willing to shop around the retailer’s scheduled promotions. Whole Foods’ long-standing focus on healthy foods sets it apart from some of its competitors, although Buechel complains that healthy food is no longer accessible in the U.S. and that many products sold in the U.S. are of lower quality than those in Canada or Europe. .
Combating climate change
Buechel says Whole Foods is also focused on food and farming practices that are healthier for the planet. Short-term weather patterns that hamper food production and transportation have forced Whole Foods to draw up backup plans and diversify its suppliers, as it did last year with leafy greens and berries. In the long term, climate change will affect not only how grocers get their food, but also what food they can get. “The issue we’re going to run into is that the products we know and love today may not be available,” Buechel says.
Buechel says growing up in rural Wisconsin with parents who grew up on dairy farms has given him a special affinity and understanding for the agricultural world. Prior to Whole Foods, he worked in technology for retailers at Accenture for 12 years.
“If we don’t do something different, [climate change] it will significantly affect the yields of what we’re growing and the quality of the products we’re putting on the market,” says Buechel. One change Whole Foods has implemented is working with several suppliers on “regenerative agriculture,” which aims to restore lands degraded by overuse. Currently, Whole Foods sells about 350 items that come from regenerative agriculture.
Go wake up, go broke?
As a company that promotes sustainability and healthy eating, Whole Foods can be drawn into the culture wars. But Buechel says the key is to focus messaging on issues related to the company’s business, without pontificating. “Our focus is to serve our highest purpose, so that we are involved in issues that directly relate to feeding people on this planet. So things like animal welfare standards are a key differentiator for our business and an area we will rely on,” he says. “We’re in a world now where it’s easy – no matter what your stance -[to] we create divisions and what we want is to bring people together to celebrate food.”