Last Saturday I popped down to my local Whole Foods to do a quick shop. I emerged with two bags of groceries, which left me $148 (£102) lighter.

As I tried to figure out how I had spent that much on a weekend’s worth of food, I was struck by a sacrilegious thought: Whole Foods isn’t all that good!

Uttering this is controversial, not least because there’s an established orthodoxy that Whole Foods is a brilliant grocer. Retail history credits the company as a pioneer. Its famed produce section, piled high with colourful items, is seen as a benchmark for fresh. And its strong ethical credentials give it a halo that many other retailers would kill for.

“Whole Foods’ recent financial performance is weak, with like-for-likes down and margins under pressure. In many established locations it is losing market share”

Neil Saunders, Conlumino

As deserved as these things are, the wider picture is more mixed. Whole Foods’ recent financial performance is weak, with like-for-likes down and margins under pressure. In many established locations it is losing market share. And among shoppers in general the perception of its offer is getting weaker. Not exactly what one would expect from a world-class retailer.

So what’s going wrong?

The main issue is that Whole Foods’ total proposition is mediocre.

There’s no denying that the company meets its values of selling quality, healthy food in a way that benefits the communities where it does business. However, these things are one-dimensional and narrow: few customers cite them as being the main reasons for picking a grocery store.

Of much greater importance are factors such as price, taste and ease of shop. Across these attributes, Whole Foods scores less well.

“Take the American staple of chicken wings. Every purchase of these has been disappointing: a bucket of scrappy little wings devoid of any real flavour”

Neil Saunders, Conlumino

On taste, Whole Foods’ ratings are variable. Some areas, such as bakery, are highly rated; others, including pre-prepared and the hot food bar, are far weaker.

From my own experience, this is something I’d agree with. Take the American staple of chicken wings. Every purchase of these has been disappointing: a bucket of scrappy little wings devoid of any real flavour.

They’re free-range chickens, killed humanely and prepared with natural ingredients, Whole Foods will say. Yes, but they don’t taste very good and that’s the main point of food, would be my reply!

If these products were cheap then there might be some excuse. They’re not: they’re very, even unreasonably, expensive. An average sized box of food for one from the hot bar can cost upwards of $35.

Price point

The issue of price is the core weaknesses for Whole Foods. The company has worked to remedy this, reducing the price of staples and investing more it its own brand. However, customer data suggest that the efforts, while reducing margins, have not shifted perceptions: Whole Foods is still seen as bad value for money.

“Even newer outlets suffer from narrow aisles and poor layouts. Such things make customers question why they are paying a premium”

Neil Saunders, Conlumino

That this is so comes back to the point about the wider proposition. Whole Foods is expensive, but its stores do not always reflect this. Some, especially older ones in urban centres including New York City, are shabby with mediocre customer service. Even newer outlets suffer from narrow aisles and poor layouts. Such things make customers question why they are paying a premium. 

The company’s new 365 concept, which launched this week, is designed to provide a more price-focused offering attractive to younger shoppers. This format has potential but it does not remove the necessity to improve productivity at existing stores.

To do that Whole Foods has to understand two things: there is much more to food retail than just ethics, and that high prices have to be justified with added value across all areas.

In other words, Whole Foods needs a holistic, and unified, proposition.

  • Neil Saunders is the managing director of Conlumino