'Whole Paycheck' no more? Whole Foods is slashing prices (2024)

Oysters for $1. A $2 discount on rotisserie chickens on Tuesdays. Price reductions on 25% of its assortment. Breaking with its “Whole Paycheck” reputation for priciness, upscale grocer Whole Foods has been cutting prices on many of its food items this year in a concession to the punishing toll high grocery inflation has taken on shoppers—even those in the middle and upper-middle class who frequent its emporia.

In that sense, Whole Foods is pulling a page from the playbook of less-bougie rivals like Walmart, Aldi and Kroger, which are offering shoppers deals too. Food inflation has spared few Americans: With grocery prices up 22% since 2021, spending on food-at-home takes up a bigger chunk of Americans’ discretionary spending than it has in 30 years.

“It seems that customers are gravitating toward where they feel the best deal is right now,” says Whole Foods CEO Jason Buechel, who joined the company in 2013 and became chief executive in 2022.

Whole Foods shoppers are even trading down to less expensive items or choosing Whole Foods’ “365” store-brand items, he says. Such trends have persisted even as inflation cools. As a result, Whole Foods, with more than 500 U.S. stores and plans to open 30 new ones annually, cannot afford to alienate any customers.

Lowering prices is harder than it seems

Lowering prices is not easy for the grocer, Buechel says. For instance, Whole Foods’ quality standards and animal welfare rules (such as only selling cage-free eggs) give it fewer suppliers to choose from.

Amazon, which bought Whole Foods in 2017, does not break out Whole Foods’ revenue in its results. But the grocer makes up the bulk of the tech giant’s “physical retail” segment, where revenue grew 6% last quarter, outperforming rivals like Kroger. Whole Foods’ annual revenue is about $20 billion.

Whole Foods’ prices remain out-of-reach for some families. But Buechel says its new deals are helping “democratize” healthy grocery shopping in the U.S. for those willing to shop around the retailer’s scheduled promotions. Whole Foods’ long-time focus on health foods distinguishes it from some of its competitors, though Buechel laments that healthy food is not more accessible in the U.S. and that many products sold in the U.S. are of a lower quality than those in Canada or Europe.

Combating climate change

Buechel says Whole Foods is also focused on food and agricultural practices that are healthier for the planet. Short-term weather patterns that disrupt food production and transportation have forced Whole Foods to draft backup plans and diversify its suppliers, as it did last year with leafy greens and berries. In the long term, climate change will affect not just how the grocer sources its food but which food it can source. “The issue that we’re going to run into is that the products that we know and love today may not be available,” Buechel says.

Buechel says growing up in rural Wisconsin to parents who were raised on dairy farms has given him special affinity and understanding of the agricultural world. Prior to Whole Foods, he had worked on tech for retailers at Accenture among other areas for 12 years.

“If we don’t do something different, [climate change] is going to significantly impact yields of what we’re growing and the quality of the products we are putting into the marketplace,” Buechel says. One change Whole Foods has implemented is working with some suppliers on “regenerative agriculture,” which aims to restore soils degraded by overuse. Currently, Whole Foods sells some 350 items that result from regenerative agriculture.

Go woke, go broke?

As a company that promotes sustainability and healthful eating, Whole Foods could get drawn into the culture wars. But Buechel says the key is to focus messaging on issues related to the company’s business, without pontificating. “Our focus is to serve our higher purpose so we get involved in issues that are tied directly to nourishing people and this planet. So things like animal welfare standards are a key differentiator for our business and an area where we will lean in,” he says. “We’re in a world right now where it’s easy—no matter what stance you take—[to] create division, and what we want is to bring folks together to celebrate food.”

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'Whole Paycheck' no more? Whole Foods is slashing prices (2024)
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