Once again, Whole Foods Market hit the ball out of the park with the third quarter earnings report the natural products retailer released on July 25. As traditional food grocers such as Kroger and SuperValu struggled in the third quarter, Whole Foods grew its net operating income 32 percent by continuing to push its value message and help shoppers make healthier living choices.
Another somewhat surprising macro force that helped fuel the retailer’s growth was the burgeoning demographic group of 18-to-32-year-old Americans who flock to Whole Foods in droves.
In speaking with analysts about the third-quarter results, Whole Foods CEO John Mackey said that his company is doing “very, very well” with millennials. “We don’t exactly know why that is,” Mackey added. “We can speculate … a lot of them grew up eating Whole Foods because their parents began it. So they’re already familiar with natural, organic food. The whole purpose-driven aspect of Whole Foods Market also has a strong appeal to the millennial generation.”
But how can the average millennial afford to shop at Whole Foods? Haven’t these consumers been trampled by the economic downturn, the poor job market for young Americans, and the staggering college debt many of them carry?
These are questions we explore in NEXT: The Natural Products Industry Forecast 2013. Although it’s true that most millennials lack the spending power of older generations, many have been raised to value natural, organic, and healthy food. Lots of these consumers would much rather invest in healthy, sustainable, and, yes, perhaps pricier food from Whole Foods than buy the cheapest food-like substance possible at the local dollar store. They also use their food choices to communicate their values and sensibilities and gravitate toward brands that are aligned with larger missions.
Unlike the 20somethings who preceded them in earlier generations, millennials are much more health conscious, much more educated about nutrition, and much savvier when it comes to food and their purchasing decisions. If your brand wants to be relevant to this generation of more than 50 million consumers, you’re going to need a standout product that resonates from a health and sustainability perspective—and provides a good value. But beyond this, you'll also need to demonstrate a clear mission and a story that goes well beyond product.
How is your company connecting with millennials? How do you believe this generation will shape the future of the natural products market?
If you are a millennial, where do you shop and why?