Whole Foods co-CEO Walter Robb recently announced at a Fortune event that the food industry at large is currently experiencing a “tectonic shift” due to the rapidly expanding acceptance of organic food as a mainstream consumer option. This messaging went public the same day that the company made its decision to lay off 1500 employees public in an attempt to decrease both operating costs and prices.
Whole Foods began as something of an industry upstart over ten years ago. At its inception, Whole Foods operated in the organic and other specialty-item space, a market which has since become much less alternative and much more common. At the time, Whole Foods could effectively pick prices. There was minimal competition to satisfy this particular demand. Today, the situation is quite different. Whole Foods became such a success that it inspired the genesis of its own competitors. Further, the market for items that are organic, gluten-free, etc. has simply exploded. Even the biggest names in the grocery game have adjusted to now carry an increasingly large variety of these types of products.
In response to this reality, Whole Foods has pivoted strategy. The recent layoffs (which included generous severance packages, a move in-line with Whole Foods’ employee-friendly identity) make money available for more competitive pricing and technology. They are also moving forwards with plans to build around 40 new stores annually, including the newly minted 365 chain. These stores will feature lower-pricing and cater to the Millennial crowd, who have played no small part in the organic food industry’s double-digit jump in sales of organic products. Simply put, that demands for what was once a wholly Whole Foods-dominated niche has ballooned has the potential to be enormously good news. They simply need to respond appropriately.
An additional component of the Whole Foods identity which the brand is working to strengthen revolves around environmental accountability and responsibly sourcing products. This will include extending its responsibly grown program, which was implemented earlier in 2015. Operating as a rating system, the program evaluates the production methods of the product, such as whether they recycle or are aggressive about water conservation. The goal is to give the buyer what it was the drew them to Whole Foods – increased transparency and the opportunity to be a more informed, conscious consumer.
Altogether, Mr. Robb’s proclamation indicates that Whole Foods is well-aware of the new landscape in which it finds itself and is more than ready to adjust accordingly. The market demands certain changes, and yet certain aspects of the Whole Food identity are non-negotiable. It is exciting to watch the company navigate this new terrain.