When the very first Whole Foods store was launched in Austin, Texas, in 1980, there were fewer than half a dozen natural food stores in the whole of the U.S., and the concept was an immediate success. Over the years, however, more and more supermarkets have recognized the growing demand for organic produce and have expanded their businesses to include more such offerings. This more competitive marketplace, combined with several scandals which have damaged the image of the group, has led to a sharp decline in sales for Whole Foods stores nationwide.
Earlier this year, after six continuous quarters with declining sales, Whole Foods’ CEO John Mackey announced the closure of nine of its 435 stores, including outlets in Georgia, New Mexico, Utah, Arizona, Chicago, California and Colorado. This represents the largest number of Whole Foods stores ever to be closed at one time, and is the supermarket giant’s first downsizing initiative since 2008.
Stocks have fallen by 11 percent in the past year, and new figures released by analysts from Barclays report that the group has suffered a 3 percent loss of foot traffic. While 3 percent might not seem like much, it represents a loss of about 14 million customers. Since each of these customers could be expected to spend between $30 and $50, this relates to losses of between $420 million and $700 million. It is understandable, then, that the analysts called this loss “staggering.”
In hard economic times, high prices chase customers away
One of the greatest reasons for this decline would seem to be the high prices charged by Whole Foods. In spite of launching its low cost 365 chain, consumers still seem to have the perception that it is simply cheaper to buy elsewhere. Indeed, allegations of price-gouging have haunted the company for years. Other big supermarket chains like Kroger and Aldi have been quick to pick up on the trend, and have both increased their selections of organic produce at more budget-friendly prices. Kroger, for example, has launched its own organic house brand called Simple Truth, and has added entire aisles of natural foods to its stores. Aldi has also announced that it will be spending $1.6 billion to improve the organic offerings at 1,300 of its stores.
These statistics will no doubt be the cause of grave concern for the management of Whole Foods. As noted by one of the Barclays analysts, “Most retailers know [that] once traffic has been lost, those patterns rarely reverse.”
The integrity of Whole Foods’ products is another issue which many in the natural health community have been calling into question for some time. Back in 2013, in an interview with an organization called Organic Spies, a former employee of Whole Foods claimed that she and other employees had been trained by Whole Foods management to lie to customers about whether or not certain products contained genetically modified ingredients. The employee, who by all reports was legitimately vetted, claimed that for the five-year period from 2007 to 2011, all employees of Whole Foods were told that the company did not carry any genetically modified products. The employee explained that during their training sessions they were taught exactly what a GMO (genetically modified organism) was, and were specifically informed that Whole Foods did not carry any GMOs.
“So if a customer would have came up to me [sic] and said, do you guys have anything with GMOs? Does this product contain GMOs? [I would have said] absolutely not. Does not contain GMOs. Because we were taught that we don’t carry anything with GMOs, only natural, nothing artificial,” she explained in her interview with Organic Spies. [Emphasis added]
In truth, Whole Foods carried many foods that contained GMOs, as was later proved.
Whole Foods also sold its customers down the river by choosing to back the Monsanto-friendly GMO-labeling bill signed into law by President Obama last year. That bill was roundly denounced as toothless and confusing by all those serious about labeling GMOs in a simple, straightforward manner, but Whole Foods threw its considerable weight behind the bill, anyway.
It would seem that for multiple reasons, Whole Foods has an uphill battle in its fight to win back both the American people’s trust and patronage.