The Whole Foods Strategy…Isn’t (Whole)

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There’s an interesting strategic play being made by Whole Foods Markets, in the midst of the company’s nearly $2 billion one-day drop in market value a few weeks ago, on the announcement of a shareholder lawsuit. Whole Foods had already come under legal pressure concerning claims of overcharging, but this new lawsuit claims securities fraud.

Now, when shareholders file a lawsuit like that, it’s not a good thing. Especially not when Millennial buyers, a segment Whole Foods has failed miserably in attracting, snicker at the chain’s exorbitant prices and call the chain “Whole Paycheck.”

In the midst of all this, Whole Foods has decided to take a market segmentation strategy to reverse its downward trend, a strategy aimed squarely at Trader Joe’s, a solid Millennial brand: launch a chain of smaller, lower-priced stores that focus entirely on stock with the Whole Foods private label, 365.

Whole Foods is going to try to out-Trader Joe’s Trader Joe’s,

This should be fun to watch, strategically speaking.

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