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Can Whole Foods Revive Customer Interest With A Loyalty Program?

Laura Brodbeck

After exploding onto the grocery scene as a market darling, Whole Foods Market, Inc. (NASDAQ: WFM) has hit some stumbling blocks, as consumers turn to lower-cost retailers to buy organic products. The store has suffered as competitors like Costco Wholesale Corporation (NASDAQ: COST) and The Kroger Co. (NYSE: KR) began expanding their own organic offerings in response to Americans' desire to eat healthier.

Now, with a new plan in place to lower costs and increase margins, Whole Foods is hoping to capitalize on customer loyalty by rolling out a new rewards program.

Testing The Waters

Whole Foods has been working on its loyalty program for some time now. The grocer began piloting the program more than two years ago, but CEO Walter Robb has given no indication as to how quickly it will expand. Robb has said he plans to bring the program into new markets this year, but that the firm is focused on ensuring that the rewards program is operating efficiently before introducing it to the masses.

Related Link: Can Whole Foods Boost Profit Without Losing Its Edge?

The Benefits Of Rewards

While offering customers discount coupons and incentives to return to Whole Foods will likely cost the firm some money, a properly designed program's benefits should outweigh the financial obligation.

Not only do rewards programs keep customers coming back repeatedly, but they often give the company more insight into shoppers' behaviors. This can make keeping inventory costs down and providing worthwhile incentives much easier.

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