Intense competition for natural and organic foods has slowed sales growth at Whole Foods. Total overall revenues are up, but comparable-store sales have declined over the past year and a half, dropping 2.4% in its most recent quarter. Why? Demand for natural and organic foods has increased, but so has the competition:
- Big box supermarkets like Kroger, Target and Walmart are carrying more natural foods.
- Powerful rivals like Trader Joe’s are opening more stores.
- Healthy online alternatives like Blue Apron and Plated have taken sales away from traditional grocery chains.
Whole Foods understands that competitors are making inroads and luring away customers. Their plan is to concentrate on their core customers via category management to maintain loyalty and increase average transaction size at checkout.
In February, Whole Foods hired dunnhumby, experts at analyzing customer behavior with a deep understanding of sales data from the manufacturer’s perspective. Whole Foods plans to use dunnhumby’s data-analysis skills to drive both its loyalty program and the implementation of category management. dunnhumby partnered with Kroger to develop its acclaimed loyalty program and will help Whole Foods build on the positive results of a loyalty pilot program launched last year in Dallas.
According to Mark Johnson, CEO of Loyalty 360, “dunnhumby’s rich data analysis will assist Whole Foods in optimizing product assortments, while at the same time bringing an understanding of the various triggers — price, promotion, selection, etc. — that drive increased purchases for each individual customer.”
Whole Foods CEO John Mackey stated, “We’re refocusing on our very best customers … we are focused on data through category management; managing our company a lot more with data and marketing information – evolving our purchasing operating model while developing data-rich, customer-centric category management capabilities are critical steps.”