I’ve been saying for a while now that Whole Foods (the epitome of organic grocery shopping) is making massive mistakes in how it reaches consumers.
As it turns out, Kroger is doing all the right things that Whole Foods isn’t.
A March 10, 2015 InvestorPlace.com article gives a good breakdown of how and why Kroger is set to thrive in the organic marketplace — and outperform Whole Foods.
Despite that industry experts believe “the traditional grocery store is fading away,” Kroger has continued to excel:
- Kroger stock has increased almost 180% since 2013.
- It has reported positive comparable-store sales for 45 straight quarters.
- It’s responding to changes in consumer demand by innovating
Researchers Jones Lang LaSalle (JLL) produced a September 2014 report titled “Out with the old, in with the new: Why the grocery landscape is shifting.” It makes a case for why traditional grocers (like Kroger) will experience decline by 2018, due to changing customer preferences.
Traditional grocers are engaged in a market share war with high-end grocers, warehouse chains and dollar stores. Shoppers prefer specialty assortments or super cheap products.
But instead of curling up into a fetal position and succumbing to these challenges, Kroger has acknowledged consumers’ changing tastes and behaviors, and acted accordingly.
For example, Kroger:
- uses data-driven customer loyalty programs
- introduced its Simple Truth line of private-label organic and natural products (which now brings in more than $1 billion in sales)
Interestingly, Kroger acts as more than just a grocery store. In 1999, it bought the Fred Meyer general merchandise chain, which lets Kroger leverage its offerings to other stores under their umbrella. This allows Kroger to target different groups and markets and grow faster.
Whole Foods on the other hand, seems to be targeting only one market: people who are already sold on the idea of organic.
A quick Google search for Kroger vs Whole Foods will yield several recent articles touting Kroger as ready to take over Whole Foods.
Even JPMorgan, in a recent report, states Kroger is poised to overtake Whole Foods Market within two years and become the nation’s top seller of organic and natural food.
That’s nuts!
But I would not be surprised at all if that (or something crazy like that) happens.
Little side note: as a consumer, I do most of my produce shopping at a Kroger-owned grocery store here in Colorado. It offers a great selection of organic produce. I rarely ever shop at Whole Foods except to get specialty items I can’t get anywhere else.
The Kroger store I shop at is old, ancient, and frankly a little ghetto. Yet for some reason I love poring through their organic produce section. I buy my grass-fed beef and organic chicken from them, too. (They’re a 24-hour store and there’s plenty of parking, too – which Whole Foods apparently struggles with.)
Other than selling specialty items, Whole Foods has given me — an organic consumer — zero reason to shop at their stores. Their stores are beautiful and clean inside, yes. The workers are friendly, yes.
But that’s about it.
I’m not a stock analyst or a professional crystal ball reader. I can’t say for sure whether Whole Foods will go out of business someday (the way Netflix crushed Blockbuster and the latter went bankrupt seemingly out of no where).
But something sure feels “off” about Whole Foods’ approach to reaching consumers.
It all comes back to creative marketing and finding ways to reach new people.
Kroger is SO GOOD at selling high-quality organic food that I don’t even need to receive any marketing messages to keep coming back to their stores. Somehow they’ve managed to make me a loyal customer without me realizing or understanding why. How did that happen?!?
While industry experts say traditional supermarkets are in trouble…I say bullshit. Here’s Kroger, kicking ass and proving them wrong.
Clearly, Kroger has its head on straight and is preemptively working to ensure it stays relevant to customers as the food landscape changes. Hell, not only is it “staying relevant,” it’s snatching up the gung ho, pro-organic consumers like myself! And it’s making organic more accessible to those who are newbies at shopping organic.
Theirs is an ongoing success story that warrants further study.
Michelle Lopez is a writer, editor, and copywriter with a BA in English/Creative Writing from the University of Colorado at Boulder.