Whole Foods Market (WFM) is looking for new ways to regain its competitive edge as it struggles with slowing sales. The chain, which was once the go to place for all things organic, has been losing market share as bigger players, such as Wal-Mart (WMT) and Safeway (SWY), as well as smaller organic stores have countered Whole Foods with more organic and natural food products.
The company has fought back by trying to shed its “Whole Paycheck" image by cutting prices and offering cheaper brands to appeal to the mainstream shopper as opposed to the so-called yuppie crowd - the more affluent consumers who were early fans of Whole Foods. However, that has been hurting margins. Whole Foods reported same-store sales rose 3.9% in the second quarter, but that was the worst performance in nearly four years. The company also lowered its earnings and same-store sales outlook for the year, after doing the same in May.
“I don’t think there’s anything in terms of massive missteps that Whole Foods has done. This is what happens when consumer growth stocks stop, basically, growing much faster than their category,” said Yahoo Finance Senior Columnist Michael Santoli. As of Wednesday’s close, shares of Whole Foods are down more than 29% for the year.
The company is getting ready to launch its first national marketing campaign this fall, and plans to offer home delivery service in 12 to 15 markets. Whole Foods also said it will test a new loyalty program in the coming weeks. “I don’t necessarily think any of these is going to be some kind of lever that’s pulled and all of sudden the growth take off again. It’s [going] to continue to essentially stay and preserve market share where they are,” Santoli said.
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- Whole Foods