Sunday, August 9, 2009

Whole Lotta Junk Foods?


In an interview in this week's Wall Street Journal, the CEO of Whole Foods admitted that "we sell a bunch of junk". I think it's fair to say that CEO John Mackay intended this as a rallying cry to help reclaim the brand's position as a healthy food retailer. But some commenters saw this as a blunder that could harm Whole Foods as it fights it out with other food retailers. In the UK, Marketing Week compared Mackay's speech to Gerald Ratner, who saw his company's value plunge by £500 million after admitting that the jewelry sold by his firm was "total crap". Whole Foods has just experienced its third consecutive quarter of declining sales at stores open at least a year, as the company continues to lose ground to brands like Trader Joes and Costco. So what would you do to turn things around at Whole Foods? Is the company on the right path by focusing on a return to healthy eating? Or are there other approaches that they should be considering. What would you do if Whole Foods were your brand?

21 comments:

  1. I think the reason that WF is losing market share to Trader Joes and Costco is truly economics...if you can buy food at the local supermarket for less money - in this economy that's what most people are doing. I have many friends who have changed their shopping strategy and are buying at Walmart and Target for non perishables and only going to the supermarket for meat, produce and dairy (Walmart doesn't sell those items in our part of NJ)

    I think it's perfectly fine for WF to sell junk food - if I am interested in organic or natural foods and wanted to splurge a little on junk food - it might make me more inclined to buy it at WF because it wouldn't feel as "bad" for you.

    If I were WF, I think I would begin to show the cost/benefit analysis to their consumers (and potential consumers) and show them that it might not cost as much as they think to eat in their stores versus the health benefits incurred.

    Plus, WF could develop one or two "showstopper" products that they really cut costs on to bring new business into their stores.

    Does WF have a customer loyalty card with cost benefits? If not, now is the time to create it.

    JoAnn in NJ

    ReplyDelete
  2. See this discussion at Treehugger.com:
    http://www.treehugger.com/files/2009/08/suggestions-for-whole-foods-ceo-mackey-for-promoting-healthy-body-and-planet.php

    ReplyDelete
  3. Anonymous8/10/2009

    There is no cost benefit analysis when 2 bags of groceries cost you $100 at Whole Foods vs. two bags a TJs cost $49 for similar items. Whole Foods is a great store and love the variety they provide, especially the deli. However, when people are hit in these economic downtimes, gourmet food is the first luxury item nixed.

    That simple.

    ReplyDelete
  4. With that remark the first thing I would do is fire the CEO.
    Then start rebranding. Whole Foods is a place you go when you care
    about product that is healthy, and not filled with sugars and drugs you don't need... but his statement says it all... and from his mouth, it spells death to a brand.

    ReplyDelete
  5. That was an irresponsible thing to say. As a CEO or a Marketing Manager, you want your target market to think that your products are quality products.

    Many people perceive the Spam brand as "junk". But I have never heard the Spam Brand Manager say that the brand is "junk". The Brand Manager's objective is to build brand equity. This manager needs the target market to perceive Spam as a quality product.

    Whole Foods would need a philosophical shift. They need to become more marketing oriented. They need to communicate that their products are quality products that are vital to a healthy lifestyle. That can justify their pricing strategy, as they can provide higher end healthier products that come at a premium.

    ReplyDelete
  6. Maybe, just maybe, the CEO is being honest. I know it's a difficult concept for Marketing folks to grasp but a CEO is ultimately responsible to her customers and I would think customers of Whole Foods want to buy good food. To know that the CEO of W-F is concerned about their offering is good news for customers.

    Sometimes the most difficult thing is to say it like it is. I'd call this refreshing.

    ReplyDelete
  7. Any changes to brand strategy should start with the question - what do our customers want? You don't change a direction because of CEO's personal views of what constitutes junk food. When I used to shop at Whole Foods, it was because I believed the food was organic and responsibly sourced - including my muffins, chocolates and snacks. But, that's just a motivation of one and needs to be explored with a statistically meaningful sample before jumping into conclusions. It could be that Whole Food's falling sales are due to a poorly executed communications strategy or a loss of competitive edge - not the product itself.

    ReplyDelete
  8. CEO saying they sell a bunch of junk is refreshing??
    You can't be serious. If he does feel this way, and since it has
    now been conveyed to thousands of folks... chances are I won't go
    to Whole Foods to buy what I used to buy.. after all it is a bunch of junk!

    ReplyDelete
  9. Out of context, the quote sounds disastrous.

    But, to be accurate, John Mackey was quoted as saying "We sell a bunch of junk. We've decided if Whole Foods doesn't take a leadership role in educating people about a healthy diet, who the heck is going to do it?"

    Mackey seems to be zeroing in on the fact that Whole Foods has wandered from its original brand positioning. In difficult economic times, consumers will turn from premium retailers unless they are given a reason to pay such prices. Mackey appears to be taking ownership of the company’s diluted brand and steering the ship back to the waters that made Whole Foods successful in the first place.

    Alan Mulally of Ford recently made similar statements in Fortune Magazine when discussing the Taurus and how the company allowed such a successful brand fall by the wayside.

    ReplyDelete
  10. Because of their unique niche, I would develop a direct marketing program to provide customers with weekly information on products, events and specials. Developing a database would be a key factor in enabling the opportunity.

    I've managed retail database marketing programs and the power generated by communicating directly to your customers is off the charts compared to all other media. Unfortunately, most grocery chains just compile data and don't use it for direct-to-consumer marketing.

    ReplyDelete
  11. Advertising legend Lee Clow one famously said of his agency, "I want to see how big we can get before we get bad." Similarly, this seems to be where Whole Foods finds itself. So I'd recommend the CEO go back to the beginning. What need did Whole Foods once fill that its competitors couldn't (as well)? Start there.

    ReplyDelete
  12. Two Things: Whole Foods leaves their initiatives to their regional offices. This leaves their branding messaging inconsistent and fragmented. I would develop national programs for consistency. Second, I would concentrate on an online presence. Their push since the recession started was a message of value, however the audience that is concerned with value is doing their research online and, besides a website, Whole Foods is not there.

    ReplyDelete
  13. Hello Martyn,
    I like your blog! great idea.
    As for Whole Foods:

    John Mackey, CEO of WF, was referring to the fact that healthy bulk items - such as beans and seeds - are in steady decline, and people are buying items such as candy and other "junk food". For a retailer, this was not a bad thing: such items were sold at premium and people still felt good about their candy, because it's organic... so I wouldn't say that this is WF's problem.

    I suppose this statement suggests that Whole Foods recognizes that the prevailing consumer trend is that of Health, not Premium, and that it is set to be the "owner" of health positioning rather than to be perceived as a premium retailer. People no longer wish to buy premium for the sake of buying premium - they state that they will pay a premium for healthier products and offering.

    Regards,
    Hamutal

    ReplyDelete
  14. As I type this, I can see Whole Foods national headquarters from my window. I used to shop at the original... Still shop at the newish one almost every day. In keeping with Mackey's Libertarianism (or some strain of Libertarianism), I'm not going to share my ideas about how they should change because that would be weak and philanthropic. :) (Incidentally, this store, the one on the first floor of their headquarters, is still quite successful, at least according to one of the managers.) I do like the premise, though, of Martyn's website. We call it "hacking the brand." Oh, and did you know that Whole Foods actually experimented with radio advertising in the Austin market? The campaign was called "Eat the World." It wasn't my best. But I was freelancing and it helped pay the bills.

    ReplyDelete
  15. Like the health crisis where we have Medicaid/MediCare for when you have neglected your nutritional health your whole life then it becomes the governments responsibility to maintain whats left for as long as possible, it is a matter of timing and education for Whole Foods.

    People get beaten with Food Pyramids and EAT FRIUTS AND VEGETABLES!! yet where is the resource that gives expert nutritional counseling? The resource for recipes and how to economically and tastefully transition to better nutrition from our current American nutritional wasteland. You see these folks wander Whole Foods every single time you visit. They look at healthy choices but to go from bulk in a bin to something appetizing on their table no person is helping them connect the dots so they buy some organic junk food and leave.

    Teach them to fish (eat organic) and WF will have a consumer for life. Watching fish in a pond is a far cry from having them grace a plate. Have them hire licensed nutritionists to wander the store and help people "connect the dots", present cooking seminars and even do full on, outside the store nutritional analysis to get the ball rolling. I cannot think of a more powerful invest in WF's future than this....

    ReplyDelete
  16. I grew up in Austin going to the little "hippie" store. It was fantastic and new. Back then they set themselves apart from the others. Today there are a number of stores like WF and they are just one of the bunch. Go back to the your roots. Help people understand the value of what WF offers and help them navigate it. Be a one stop store with all the answers. They need to increase their web presence and give people things of value - recipes, ideas, new things to look for. They also need to offer more local ingredients.

    ReplyDelete
  17. We love Whole Foods. We also can't seem to leave the store without spending at least $100..even when we stop to "just pick up a few things". As a results, the majority of of our shopping cart gets filled at Stop and Shop or Market Basket. These chains are expanding their health and organic food products and giving the White's, and many families like us, less reason to make that extra stop at Whole Foods.

    To increase their share of wallet Whole Foods needs to develop a more consistent and compelling brand message... why should Whole Foods be my first stop? .... and then find ways to tailor and communicate their unique value proposition and build brand loyalty with targeted customer segments. They do a great job of merchandising. They need to raise the bar on their marketing.

    ReplyDelete
  18. #1 Ditch the CEO for making at best, a poorly worded statement for his company and at worst sabotaging a brand.
    #2 Re-invent the supply chain and product offerings based on an emphasis on local procurement and support it with item by item signage of where it comes from and why it was chosen allowing for the shopper to see the decision making process themselves and the logic behind it. Allow for shopper's to be included as one of the voices on those decisions via website. (watch you web hits soar!) Sell the decision for every item and you sell the store.
    #3 Market the image of a co-op in the form of a cooperation of ideas, ideals, and ideology. Create the perception of community ownership via the marketing of "changes made based upon local input and local offerings".
    Sell how responsive you are to the clients/shoppers.
    #4 Extreme emphasis on "experiential shopping". Create displays, employee and product interactions with the shopper that have the client engaging all their senses, and technology. Twitter fruit?
    5# Customer service. No matter what the ideal or ideology. The client needs to be overwhelmed with how they are treated in the store. Extensive employee training and expectations. Over all message..You matter & you can make a difference!

    ReplyDelete
  19. Abercrombie is a brand of its own kind. Its aura clearly explains you the demand and love for its products. This American brand has become the most acclaimed and reputable brand. The clothing line of Abercrombie and Fitch has become highly successful and its demand has been increasing by each passing day. All those people, who are fashion freaks and want to dress up and accessorize in a trendy yet sophisticated way, they prefer to get their hands on the stuff, which is manufactured by Abercrombie & Fitch .

    ReplyDelete
  20. Applied to some foods that is unhealthy and has low or poor nutritional value. Junk food is a term foods are high in fat, sodium and sugar, which can lead to obesity and a range of attendant health problems, including diabetes, heart disease and arthritis. Stop Eating Junk Foods

    ReplyDelete
  21. Creating adhering to a good diet propensities early: If we can instruct our youngsters to eat sound nourishments appropriate from youth

    ReplyDelete