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Whole Foods Prices Get Competitive

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This story also appeared in the August 27 issue of Supermarket News.

A new study shows that Whole Foods Market appears to be making progress in its effort to make its pricing more competitive.

Wells Fargo Bank, which recently initiated coverage of Whole Foods and The Fresh Market, as well as vitamin and supplement retailers GNC and Vitamin Shoppe, said it found that Whole Foods’ prices beat those of Pleasanton, Calif.-based Safeway by 7% on a basket of 100 items.

“Overall, we were surprised to find that Whole Foods’ prices were much more competitive than we expected,” said Kate Wendt, an analyst at Wells Fargo.

The study found that Trader Joe’s prices were 4% lower than those of Whole Foods, but Whole Foods beat Sprouts Farmers Market on price by 3%, The Fresh Market by 14% and Amazon Fresh by 27%, in addition to Safeway.

“Given that Whole Foods arguably already offers the best-quality products, we believe that as the company continues to invest in price and consumers increasingly recognize that its prices are not actually as high as they think, those looking to find healthy, natural and organic products will start making more trips to Whole Foods,” Wendt said in the report.

Whole Foods  — once branded “Whole Paycheck” by consumers for its premium pricing — has been working for several years to change that image.

The report was also bullish on Whole Foods’ growth opportunities given its more aggressive expansion, favorable real estate opportunities and consumers’ interest in the brand.

“The reason our panel does not shop at Whole Foods or does not shop more frequently is predominantly the lack of a store nearby,” the report explained.

Whole Foods said it sees the potential for 1,000 stores in the U.S. — more than triple its current presence — and in recent conference calls with analysts said it has been eyeing smaller locations. In late August it opened its seventh and smallest location in New York City at a reported 38,000 square feet.

In a recent interview with the Chicago Tribune, Walter Robb, Whole Foods’ co-chief executive officer, said the chain has also been exploring the opportunities presented by so-called “food deserts” — areas that are underserved by grocery stores. The company has been in talks to open stores on Chicago’s South Side, for example, and in Newark, the article said. Next year the chain is entering an underserved area of Detroit.

Discuss this Blog Entry 2

on Sep 4, 2012

If you found 100 items cheaper at Whole Paycheck, it would have to be the only hundred. I shop both Safeway and Whole Paycheck, depends which is closer on my journey. I find your article hysterically unbelievable, as would anyone that has shopped at both markets here in San Francisco. Come on, keep it real.
Amused,
Baron Hansen
SF, CA

on Sep 5, 2012

Wells Fargo did not state that it conducted the survey in San Francisco, only that it was an "extensive, in-store survey" that focused on organic and healthful items. Its report concluded that: "Safeway’s prices were modestly cheaper in meat and seafood, as well as dairy and eggs and coffee, and juice and beverages, but much higher in produce, bakery, dry, packaged and canned goods, and frozen items."

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