The Existential Risk Of Losing Your Way: Whole Foods Considers Selling Mass Brands
Stop me if you've heard this one before. You're making your weekly grocery list and you get to the point where you decide which store to visit. You look at the items on the list - fruit, vegetables, meat, snacks. I'm not convinced of the quality of fruit, veggies and meat at my local store so Whole Foods looks like the obvious choice. But wait. What about snacks. Not just any snack, though - Triscuits. They're healthy-ish and I like a good Triscuit with cheese. However, I've tried the Whole Foods version of this cracker type and it's…meh.
So what do I do? Do I scrap my trip to Whole Foods to ensure that I can get my Triscuits at the local grocery store? Do I make a second trip AFTER Whole Foods? Or do I just forget about the Triscuits for now and pick them up during a fill trip at my local store in the middle of the week.
Honestly, I do all three - just depends on how much I'm craving Triscuits. Apparently, Whole Foods has been doing some consumer research on people like me - people who want the promise of eating healthy, without Ultra-Processed Foods - but who also have some Ultra-Processed habits like Triscuits. It makes sense to think about capturing that one extra purchase from that consumer. They're already in your store, just capture that one more product.
For most retailers, I would say that this is a tried and true strategy - getting current consumers to buy more. Capturing more of their "share of requirements" - which means if consumer spend 50% of their money at one retailer like Whole Foods, how can I get them to spend 51% of their money at Whole Foods. It is a classic revenue growth tactic for brands and retailers.
There is another revenue growth tactic that Whole Foods has been leveraging for years - basket building and upselling. For consumers coming into your store, how do you get them to buy that delicious apple pie in addition to their staples. How can they get you to buy the premium ice cream instead of the value ice cream. This has been successful for Whole Foods for one core reason - they understand their consumers. They know that their consumers are looking to snack and indulge like everyone else - but in a less processed, healthier way. And they also know that their consumers are distrustful of the large multi-national food companies and shun which is why they don't stock their products. This has given rise to a startup-friendly environment where Whole Foods delights its consumers by bringing in brands that are high on authenticity & story and low on GMOs & UPFs. The result is Justin's not Jiffy. Poppi not Pepsi.
So that's why today's article in the Wall Street Journal is so perplexing: https://www.wsj.com/business/retail/whole-foods-brand-identity-amazon-9953d8a0?st=2xWHdq&reflink=desktopwebshare_permalink
The upshot is that Whole Foods is trialing a way to sell multi-national food companies' product - in either a "hidden" way (ShopBots fetching your Doritos from the back) or in a "store in store" kind of way - keeping the Doritos in a dedicated section of the store away from the other snacks.
I'll pause here for effect. Pay attention to what's going through your mind right now. Likely that feeling is cognitive dissonance which goes something like, "Wait, doesn't Whole Foods have a mission to sell wholesome, natural foods? Aren't they my food curator, making sure that anything I buy has a stamp of that mission? So, how can they sell Doritos which seems to be the exact opposite of wholesome and natural - and can barely be registered as food."
This is a classic case of a brand or business departing from the mission and values which brought them success to chase new revenue streams or growth. It may seem like I'm a brand purist, pearl clutching at the very practical moves of a business which needs to deliver growth, but I don't see it that way. With a move like this Whole Foods risks:
Losing their relevance in the value proposition: If Whole Foods is closer to Kroger, it means that shoppers who are looking for their curated selection of naturally vetted products lose trust that Whole Foods can deliver on that mission rather than chasing increased sales
Opening up their core point of difference to competitors: Sprouts, Natural Market are just salivating to claim the crown of natural/organic retailers from Whole Foods. This move opens up a crack to competitors to de-position Whole Foods as just another pawn of Amazon
Lastly, it should be noted that a move like this also ignores their consumer. The wellness and natural foods consumer has left mass brands and retailers for a reason, and the distrust of large mechanized food is real. For their core consumer, this is akin to "selling out" their original mission. Once you've lost the consumer who has brought you success then you erode the very foundation of your brand and revenue stream.
