After Whole Foods Market’s co-CEOs reported they’re willing to compete on price, Rafi Mohammed wrote an interesting analysis for the Harvard Business Review that all health food store owners should read and consider.
Does everyone need to reduce prices to compete in this heated grocery market? No. But the advice Mohammed offers extends beyond dollars and makes sense.
"(John Mackey) wants to simply lower prices to 'hopefully get a lift on that item as people purchase more of it, and the overall perception of your basic price value ratio is improved, and it helps your overall sale.' This statement reflects a fundamental misunderstanding of the scale of the pricing problem and the efforts required to fix it. A lackadaisical price slash of, say, five-to-ten percent is a slow-boat-to-nowhere strategy."
He says Whole Foods Market needs to:
- Activate dormant customers.
- Take concrete pricing actions, not tinker with pennies.
- Consider produce promotion.
- Publicize private label products.
Slashing prices, for most natural products retailers, is not a top strategy but pricing is always important to review.
Here are some resources to help you make sure you are pricing your products right and boosting basket size: