Whole Foods Cuts Costs, Obfuscates Pricing From Consumers

There's a good little number in today's Wall Street Journal that describes how Whole Foods is embarking on a number of new initiatives to go back to its roots and lure customers into stores, especially amidst competition from Costco and Trader Joes. These efforts follow-on from existing cost cutting (primarily around SG&A expense) in the last quarter which increased their overall net income. But what's most interesting to me from a Spend Management perspective is not what Whole Foods is doing to try to reduce its own spending -- it's how it's trying creative selling techniques that will force customers away from making direct price comparisons. In other words, Whole Foods is trying to break its own customers of the Spend Management paradigm whenever and wherever it can.

According to the above-linked article, Whole Foods is moving away from pricing by the pound. To this end, "Items such as salmon or pastries are now priced individually, instead of per pound." Their claim is that "The goal ... is for shoppers to be able to easily calculate how much it will cost to put a meal on the table". But honestly, this is organic manure. And it stinks to high spend heaven. Whole Foods is actually following a policy that metals companies have used for decades to put the screws to their customers (i.e., pricing per piece rather that per pound). This is a way of making a purchase more price blind and less comparable. Even if Whole Food's initial pricing for items such as fish and meat follows the old pricing benchmarks when it all works out in the end, you can be sure it won't for long given the underlying motivation beyond all strategies such as this -- to separate and take additional dollars from the customer's checkbook.

Personally, this only further turns me off to Whole Foods. Within walking distance from where I live, there are two Whole Foods stores (expand the radius by another mile or so, and the number climbs to four). Yet I'd say Whole Foods only gets 10% of our annual food budget. We're also close -- but not as close -- to Costco and multiple Trader Joes that are almost always less money and usually deliver higher quality items. Take that fish for example. If you buy wild salmon from Whole Foods at the "fresh" counter, it's still often been frozen (they'll tell you if you ask). Not only is it a few bucks more per pound than Trader Joe's equivalent, the staff at Whole Foods has no idea how to debone a fillet, adding considerable time to my prep and cooking time (which factors into my total cost equation). Perhaps this, combined with their price obfuscation making the cost of fish per pound less transparent is metaphorical indeed -- it's spend death by a thousand little sharp bones.

Jason Busch

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