In a statement explaining the job cuts, Whole Foods said that the decision was part of its effort to lower prices for customers and invest in better technology. And that underscores how essential the company believes it is to reposition itself in a fast-changing grocery environment.
Whole Foods long ago earned the nickname “Whole Paycheck” thanks to its reputation for sometimes eye-popping prices on items such as grass-fed beef and local produce. But back when it largely had the organic market to itself, it didn’t feel as much pressure to bring down prices. Now, as consumers have become more interested in healthy eating and are more eager to know where their food comes from, plenty of other retailers are competing for organic grocery shoppers’ dollars. Kroger, Wal-Mart and Target have developed organics lines that have seen strong sales growth, while chains such as Trader Joe’s and Sprouts Farmers Market have been quickly expanding their fleets. That has pushed Whole Foods to find ways to deliver more value to its customers.
The grocery chain has tried a host of tactics to achieve that, including a pilot of a loyalty rewards program. The company said in July that the rollout is going more slowly than anticipated because they are adjusting it based on customer feedback. Its biggest bet yet on winning over budget-conscious customers is its new chain, 365 by Whole Foods Market, which is set to open in Los Angeles and other cities in late 2016. Executives have promised these stores will be smaller than traditional Whole Foods stores and offer “everyday low prices” that they hope will appeal to a different kind of shopper.
Whole Foods also suffered a spate of bad publicity earlier this year when it was found that the retailer was routinely overcharging New York customers for prepackaged foods.
Whole Foods stock is down 38 percent so far this year, a sign that investors are perhaps unconvinced that Whole Foods has settled on a strategy that will help the company to deliver strong long-term sales growth and profitability.
But the job cuts are a sign that Whole Foods remains committed to finding ways to trim costs from its business and, in turn, deliver lower prices.
Whole Foods has also been investing in new technology as another avenue for reaching more customers and boosting incremental sales. They’ve partnered with Instacart, the grocery delivery service, to get orders to shoppers’ homes. Executives have said that some stores are seeing up to five percent of their sales in delivery since the launch of the partnership.
With their app, Whole Foods is also experimenting with a feature that allows users to order coffee or sandwiches as they set foot in the store. The company hopes these tactics will help them ride the wave of consumer interest in organics and fend off newcomers in the niche they helped to create.