Overpriced Organic: Whole Foods Cuts Spend

Sincerest apologies to Whole Foods, but the U.K. just isn't that into you. The largest organic supermarket in the U.S., Whole Foods impressed American shoppers with fresh food and innovative marketplaces, building about 300 stores on American soil in the past decade. The company expected similar, dramatic results in the U.K., with high performance aims for their flagship store in London last summer. At the time, organic food sales were rising, and the credit crunch was still two months away. Debuting on London's High Street last June, the three-story, 80,000 square foot marketplace met an eager crowd at its unveiling. However, the excitement was short-lived. All six Whole Foods stores in Great Britain, including the five that operate under the French and Wild label, suffered a £10 million ($18.4 million) loss during the past year.

Whole Foods isn't just facing problems in the U.K. In times of economic crises, high-end food is the first expense that households avoid. Smaller producers in the U.S. and U.K. are having much better luck in the recent market, but Whole Foods is taking action. Already touting plans to cut capital spend during the next year, Whole Foods hopes to fight dawdling sales growth and face economic troubles headfirst. The company plans to open a mere nine new stores and six relocated stores in the U.S. during the next fiscal year, and the future of new U.K. stores remains uncertain. For the approaching year, Whole Foods has lowered their expectations for sales, anticipating six to ten percent sales growth rather than the earlier predicted 25 percent growth. But they're still optimistic. According to the Financial Times, "Whole Foods said it expected to the [U.K.] operation to 'approach break even in fiscal year 2011.'"

Best of luck to them. When I discovered a Whole Foods near my apartment last summer, I was convinced that it would become my new supermarket-of-choice. Until, of course, I realized that those tales of "poor grad students eating Ramen" weren't falsified fables, and decided to hold the organic peanut butter for better financial times. Whole Foods isn't the most economical place out there. And despite their plans to cut spend, it's doubtful that the company will drastically lower prices to change those "Whole Paycheck" perceptions.

Earlier this summer, Jason Busch shared some interesting thoughts on organic food shopping. "I've always found the prices [at Chicago's Green City farmers' market] quite high. But this year, the invisible hand is doing interesting things to the local food market. Turns out that local farm grown organic eggs are the same price ($4.00) as years past. But the price for the same eggs at Trader Joe's or Whole Foods -- two higher end local grocery stores -- are even higher." He cites as reasoning the fact that these local farmers haven't been hit with the recent price inflation that broader agricultural markets face, making local prices cheaper than Whole Foods prices: "These farmers are not dependent on feed and supplies like larger purveyors because their herds feed on local pastured lands and their crops come from last year's seeds in many cases." Something to keep in mind, then: Unless Whole Foods passes their spend savings to consumers this fall, maybe farmers' markets are the best pit-stop for organic food.

- Amy Edwards

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