Whole Foods starting to dance between quality and value

by Eric Schroeder
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BOSTON — Executives at Whole Foods Market, Inc. believe the company is in “the early innings” of educating consumers about the value proposition that its stores carry.

“I think we have always had good value,” Walter Robb, co-chief executive officer, said during an Oct. 2 presentation at the Wells Fargo Retail and Restaurant Summit held in Boston. “I think we have done a poor job communicating what the value is that we do have.”

Specifically, Mr. Robb pointed to the inherent value in the company’s 365 Everyday Value product line. Introduced in 1997, the 365 Everyday Value line has more than 1,200 stock-keeping units, and, Mr. Robb said, is an “excellent value with excellent standards.” However, he acknowledged that Whole Foods probably has done a “poor job” explaining that to consumers.

“It’s always the dance between value and quality,” he said. “We have the highest quality standards in the supermarket industry. It’s not even close, honestly. In many cases, it’s just not the same food, and yet to be relevant to people, we’ve got to continue to really talk about the value and the value of our quality.”

Mr. Robb said Whole Foods is determined to “strategically and surgically” continue to make investments to provide products that are affordable and accessible to consumers. At the same time, the company is focused on offering a range of choices in each and every department.

“We’ve found that customers often put their choices together in different fashions,” he said. “They will take a value choice in this department. They will take a higher price point choice in the other. So the effort is really to continue to make the range of choices available to them in each and every department.”

As an example of the value Whole Foods has put behind its products, the company in 2009 began putting the 365 Everyday Value line through Non-G.M.O. Project verification and encouraged its grocery suppliers to do the same. In March of this year the company said that by 2018 all products in its U.S. and Canadian stores must be labeled to indicate if they contain bioengineered organisms. The effort made Whole Foods the first national grocery chain to set a deadline for full G.M.O. transparency.

“I think we felt we needed to do this because it appears that no standard is forthcoming from the governmental entities, and this is in a case where our customers really pushed us to take even more of a leadership position than we had up to this point,” Mr. Robb said of the Non-G.M.O. Project initiative. “We have always supported labeling since the early 1990s, but this was a step we took last spring to say that we would have everything in our stores labeled by 2018, full transparency across all the products.”

Whole Foods Market currently sells 3,300 Non-G.M.O. Project verified products from 250 brands, more than any other retailer in North America. It now will expand the effort, working with suppliers in all categories as they transition to ingredients from non-bioengineered sources, or clearly label products containing bioengineered organisms by the five-year deadline.

“Many of our suppliers are 80%, 90% there already,” Mr. Robb said. “But for those who are not, we are trying to give them the support because, in some case, they’ve got to go back and rework their supply chain. They need time to do that. In many parts of the supply chain, there are not G.M.O. technologies currently operating. In many parts of the supply chain, it’s indirect, like with the animals and the animal protein production.

“So this is a big commitment to do this. This is why we need the time to do it. And I think what it means is ultimately we are creating a new, differentiated supply chain using our power in the marketplace to move people, hopefully over a period of time, voluntarily, to that place where customers have that information.”
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