The Kroger Co. (KR), The Fresh Market Inc (TFM): Whole Foods Market, Inc. (WFM) Moves Beyond Organic

Page 1 of 2

Whole Foods Market, Inc. (NASDAQ:WFM) is working to lessen being perceived as an upscale grocer by offering more deals to compete more effectively with other food retailers. It’s also moving beyond the more expensive, organic items the chain is known for to more conventional, cheaper food items.

According to the Wall Street Journal, some of the company’s sales strategies include “flash” sales on specific items promoted on social media that run for a few hours, like a five-hour sale on ice cream, where customers can buy one item and get one free. Customers can also expect to see more one-day sales on specific items.

Whole Foods Market, Inc. (NASDAQ:WFM)

Whole Foods Market, Inc. (NASDAQ:WFM)’ goal is to appeal to a more middle-class food shopper who may perceive the grocer as too expensive and a place that caters to affluent shoppers. Stores are also opening up in lower-income areas and in smaller markets. The focus on more affordable options in recent years has helped the company survive decreasing revenue brought on by the recession.

In late 2008, Whole Foods Market, Inc. (NASDAQ:WFM) shares traded as low as $4.27. Shares currently trade at around 12 times that amount after a stock split of two-for-one on May 29. Despite the improvement in the stock price, Whole Foods Market, Inc. (NASDAQ:WFM) has under-performed larger rival The Kroger Co. (NYSE:KR), but did beat smaller retailer The Fresh Market Inc (NASDAQ:TFM):

Adj. close on 7/29/2013 Adj. close on 1/2/2013 % change
Whole Foods Market $55.62 $45.31 +22.8%
Kroger $39.45 $26.11 +51.1%
The Fresh Market $52.78 $46.70 +13%

Source: Yahoo! Finance

Customer education key in maintaining loyalty
Whole Foods Market, Inc. (NASDAQ:WFM) has offered its customers money-saving tips for a while now using coupons and via information on its website. The discounts have not had much of an impact on profit margins, which have held steady at around 36%.

Co-chief executive Walter Robb discussed in the Wall Street Journal that heavy discounting will continue to match competitor prices and that aggressive pricing may negatively impact gross margins. Mr. Robb noted the importance of striking the right balance with sales, which may not have the intended effect of bringing customers into the store to buy sale and regular-priced items .

In its 2012 annual report, Whole Foods Market, Inc. (NASDAQ:WFM) noted it had decreased the pricing gap versus its competitors on value items to its narrowest margin. The company’s targeted pricing and promotional strategies achieved good results in a fiscal 2012 competitive survey, resulting in its most competitive position in more than three years.

In its latest third quarter ended July, net income increased 21% to $142 million and diluted EPS rose 20% to $0.38. Comparable-store sales rose 7.5% .

Rivals move in opposite direction
While Whole Foods moves to shed its pricey reputation, rival The Kroger Co. (NYSE:KR) has increased its natural- and organic-product selection to attract a more affluent consumer. Customers interested in products like dry-aged beef and a wide selection of cheeses and vitamin supplements.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!