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Roundabout
Senior Member
Whole Foods CEO confirms aggressive Canadian expansion: http://www.retail-insider.com/retail-insider/2014/11/whole-foods
Roundabout
Senior Member
James
Senior Member
Just read that Whole Foods is planning a new chain of stores with lower pricing in hopes of turning around their decreasing revenues.
Whole Foods Plans New Chain To Court Millennials
Walter Robb, co-CEO of Whole Foods, said the stores will also appeal to younger customers with a "modern, streamlined design, innovative technology and a curated selection."
Full article: http://m.huffpost.com/us/entry/7228384
Whole Foods Plans New Chain To Court Millennials
Walter Robb, co-CEO of Whole Foods, said the stores will also appeal to younger customers with a "modern, streamlined design, innovative technology and a curated selection."
Full article: http://m.huffpost.com/us/entry/7228384
AlvinofDiaspar
Moderator
"Curated selection", ugh, as if the existing stores aren't "curated" enough. Eating all that organic produce won't help to make a dent on the artifice of the whole business.
AoD
AoD
James
Senior Member
I've shopped at Whole Foods a couple of times and while I'm not one to thrift shop my groceries, I simply didn't feel like I was getting a lot more value for what I was paying. Here is a new Time article in light of WFM's recent struggles and their new attempt at reviving their sales via a lower-cost sub-chain of stores:
http://time.com/money/3850726/whole-foods-cheap-millennial-friendly-stores/?xid=yahoo_money
The Real Reason Whole Foods Is Launching Cheap, Millennial-Friendly Stores
Paul J. Lim @pauljlim
While consumers may rejoice, investors should take note: Whole Foods' plan to open a new, lower-cost chain may be a face-saving move in case its existing expansion strategy doesn't work out.
A company saying it will cater to millennials these days is like businesses putting .com in their names back in the late 1990s. It’s code for rapid expansion plans and endless potential.
Yet when Whole Foods Market WFM 0.91% announced the launch of a new chain of cheaper stores geared to the tastes of twentysomethings—who may not be able to afford to spend their “whole paycheck†on organic and naturally grown foods—Wall Street scoffed.
Whole Foods shares, in fact, sank by much as 13% (though they recovered slightly from Thursday’s lows).
What gives?
Well, investors may be on to Whole Foods’ marketing ploy to try to turn a lemon of an organic growth strategy into artisanal lemonade.
Long before this upscale company brought up the notion of a separate, cheaper chain, it raised eyebrows by announcing a major expansion of its flagship Whole Foods stores. The natural food giant, with a reputation for high prices, plans to open 1,200 stores throughout the U.S., up from 417 today.
When the company began talking up this plan a couple of years ago, investors questioned Whole Foods’ bet on smaller markets in the Midwest and South with lower per-capita incomes than are found in current Whole Foods locations.
Those fears have become heightened lately as same-store sales growth at Whole Foods has already started to slip.
On Wednesday, the company revealed that revenues at stores open for at least one year grew just 3.6% in the quarter ended April 12, not the 5.3% that was expected. Yet the company maintained that it continues to see sufficient demand for its original strategy.
Not everyone agrees. “Personally, I question whether there can be 1,200 Whole Foods stores,†says Brian Yarbrough, an analyst with the brokerage Edward Jones who follows the natural foods company.
But this new strategy could be a way for the company to hedge its bets.
“I wonder whether at some point, after starting to roll out these new cheaper stores in 2016, they come out and say, let’s cut back on that original goal of 1,200 Whole Foods stores and instead open 500 of these smaller cheaper stores,†Yarbrough says.
Morningstar equity analyst Ken Perkins notes that the cheaper millennial-friendly stores that Whole Foods has in the works serve a couple of purposes. For starters, they are probably meant to go head-to-head with rivals like Trader Joe’s with smaller stores that have tremendous appeal to younger households.
Plus, Perkins says, “they are a way to take advantage of growth without being so tied to the higher-end demographic†catered to by the main Whole Foods stores.
But Yarbrough—who downgraded his recommendation on the stock yesterday from a “Buy†rating to a “Holdâ€â€”notes that because of the pricing strategy, these will be lower-profit-margin outlets. What’s more, the new chain may end up cannibalizing sales at existing higher-margin Whole Foods stores.
And there’s potentially an even bigger problem.
Even if the cheap stores are a hit, competitors such as Trader Joe’s or Sprouts may be forced to lower their prices to keep this new chain at bay, Yarbrough says. While that’s great for consumers, it would in turn force regular Whole Foods stores in those regions to lower their prices as well to stay relevant in the marketplace. That would have the effect of crimping profit growth for the entire company.
“For the last 15 years, Whole Foods had this natural foods space to itself,†Yarbrough says. “But now, the whole landscape is changing.â€
And Whole Foods may be helping to hasten that change in a way that won’t be good for the company in the long run.
http://time.com/money/3850726/whole-foods-cheap-millennial-friendly-stores/?xid=yahoo_money
The Real Reason Whole Foods Is Launching Cheap, Millennial-Friendly Stores
Paul J. Lim @pauljlim
While consumers may rejoice, investors should take note: Whole Foods' plan to open a new, lower-cost chain may be a face-saving move in case its existing expansion strategy doesn't work out.
A company saying it will cater to millennials these days is like businesses putting .com in their names back in the late 1990s. It’s code for rapid expansion plans and endless potential.
Yet when Whole Foods Market WFM 0.91% announced the launch of a new chain of cheaper stores geared to the tastes of twentysomethings—who may not be able to afford to spend their “whole paycheck†on organic and naturally grown foods—Wall Street scoffed.
Whole Foods shares, in fact, sank by much as 13% (though they recovered slightly from Thursday’s lows).
What gives?
Well, investors may be on to Whole Foods’ marketing ploy to try to turn a lemon of an organic growth strategy into artisanal lemonade.
Long before this upscale company brought up the notion of a separate, cheaper chain, it raised eyebrows by announcing a major expansion of its flagship Whole Foods stores. The natural food giant, with a reputation for high prices, plans to open 1,200 stores throughout the U.S., up from 417 today.
When the company began talking up this plan a couple of years ago, investors questioned Whole Foods’ bet on smaller markets in the Midwest and South with lower per-capita incomes than are found in current Whole Foods locations.
Those fears have become heightened lately as same-store sales growth at Whole Foods has already started to slip.
On Wednesday, the company revealed that revenues at stores open for at least one year grew just 3.6% in the quarter ended April 12, not the 5.3% that was expected. Yet the company maintained that it continues to see sufficient demand for its original strategy.
Not everyone agrees. “Personally, I question whether there can be 1,200 Whole Foods stores,†says Brian Yarbrough, an analyst with the brokerage Edward Jones who follows the natural foods company.
But this new strategy could be a way for the company to hedge its bets.
“I wonder whether at some point, after starting to roll out these new cheaper stores in 2016, they come out and say, let’s cut back on that original goal of 1,200 Whole Foods stores and instead open 500 of these smaller cheaper stores,†Yarbrough says.
Morningstar equity analyst Ken Perkins notes that the cheaper millennial-friendly stores that Whole Foods has in the works serve a couple of purposes. For starters, they are probably meant to go head-to-head with rivals like Trader Joe’s with smaller stores that have tremendous appeal to younger households.
Plus, Perkins says, “they are a way to take advantage of growth without being so tied to the higher-end demographic†catered to by the main Whole Foods stores.
But Yarbrough—who downgraded his recommendation on the stock yesterday from a “Buy†rating to a “Holdâ€â€”notes that because of the pricing strategy, these will be lower-profit-margin outlets. What’s more, the new chain may end up cannibalizing sales at existing higher-margin Whole Foods stores.
And there’s potentially an even bigger problem.
Even if the cheap stores are a hit, competitors such as Trader Joe’s or Sprouts may be forced to lower their prices to keep this new chain at bay, Yarbrough says. While that’s great for consumers, it would in turn force regular Whole Foods stores in those regions to lower their prices as well to stay relevant in the marketplace. That would have the effect of crimping profit growth for the entire company.
“For the last 15 years, Whole Foods had this natural foods space to itself,†Yarbrough says. “But now, the whole landscape is changing.â€
And Whole Foods may be helping to hasten that change in a way that won’t be good for the company in the long run.
grey
Senior Member
Maybe the company is failing with millennials because they're more informed about what a scumbag the CEO is.
Bayer
Senior Member
I don't know, I'm a Gen X and I've known that for years. With all the great independent food stores we have in this city, I don't see the need for this anti-union, American-owned store.
WislaHD
Superstar
May 18, 2015:
Roundabout
Senior Member
WislaHD
Superstar
AlvinofDiaspar
Moderator
The ethical bankruptcy of the chain continues:
http://www.theglobeandmail.com/repo...tomers-for-prepackaged-foods/article25099230/
AoD
http://www.theglobeandmail.com/repo...tomers-for-prepackaged-foods/article25099230/
AoD
James
Senior Member
Just so that I understand, I definitely believe knowingly mislabelling a product's weight resulting in an overcharge should be deemed a violation, but I'm curious what the definition of "overcharging" is. If they clearly say $10/lb for seedless grapes and you willingly buy precisely 1 pound of seedless grapes, you should pay $10, regardless if that's overpriced compared to market value.
It seems to me there's a difference between "overpriced" and "overcharged". Most items at Whole Foods are overpriced, and I believe customers understand this. Overcharging, which I believe is what's happening here, is something entirely different.
It seems to me there's a difference between "overpriced" and "overcharged". Most items at Whole Foods are overpriced, and I believe customers understand this. Overcharging, which I believe is what's happening here, is something entirely different.
Skeezix
Senior Member
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Agreed. I think these were prepackaged foods charged by weight, where the weight indicated on the package was incorrect. So it fits within your description of "knowingly mislabelling a product's weight resulting in an overcharge".