The Fresh Market Inc (NASDAQ:TFM)’s wounds are likely self-inflicted. That sounds like a condemnation of the company but it’s really not. Fresh Market has done very good things and consumers clearly love the place. The reason it’s getting hit more than Whole Foods is probably due to the success of its branding. When you walk into Whole Foods, it’s clear that you’re going to pay a premium for food, but it’s also clear that the place was meant to be laid back. The wood is rustic looking, the employees are covered in tattoos, and there’s a juice bar near the cafe.
The Fresh Market exudes an expensive vibe, which is supposed to be classy and make you feel like you’re in a grocery store from the mid-twentieth century. As it turns out, it’s not more expensive than Whole Foods, but it’s done a good job tricking people into thinking that it’s more exclusive. As a result, it’s easy to understand why customers would pull back more on visits to Fresh Market than they would to Whole Foods — you feel like you’ll spend more money at Fresh Market.
The bottom line
Normally, I’m pretty dismissive of CEOs when they rant about the economic environment and how it’s holding them back, but in this case I’m inclined to give management a little room. As a final point in Fresh Market’s favor, The Kroger Co. (NYSE:KR)‘s comparable sales inched up to 3.5% in the last quarter from 3.2% in the previous quarter. While that’s mainly evidence of Kroger running a very solid business and executing its plan like a champion, it’s also probably driven by customers searching out lower-cost alternatives to the high-end grocers. Only time will tell if The Fresh Market is really riding the waves of the economy, but I still have faith that management will be able to pick things back up this year.
The article The Fresh Market Has a Stumble, but Not a Fall originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.