Natural Foods Merchandiser
Whole Foods Market initiatives boost first-quarter results

Whole Foods Market initiatives boost first-quarter results

Whole Foods Market touts the benefits of competition after a year in which the changing natural foods retail landscape caused stock challenges for the supernatural grocery store.

Competition might have been a negative refrain for Whole Foods Market as its stock took deep hits last year. But co-CEOs Walter Robb and John Mackey touted the benefits of a crowded market during the supernatural’s first-quarter conference call Feb. 11, saying it has made company better.

“Competition is your ally,” Mackey said. “It  knocks you out of your complacency. It keeps you from being lazy. It forces you to evolve. And Whole Foods Market's a very competitive company, and when we are challenged, when competition rears its head, we respond.”

The company is responding by finding innovation that matters. President and Chief Operating Officer A.C. Gallo cited programs such as the natural grocer’s responsibly grown produce, animal welfare and sustainable seafood standards. He also noted the amount of “me too” product adoption by the competition.

“We take pride about being the first of getting products on the shelf,” Gallo said. “And that’s what we do, we really innovate. A lot of our culture is about innovation, and so we know that in this market, people are going to be looking to sell a lot of the products we do because they know that we've been successful.”

The company announced a 10 percent earnings increase and 10 percent revenue jump, to $4.67 billion, over the same quarter a year ago. The stock fell about 20 percent last year from its 2013 peak.

Robb attributed Whole Foods Market's renewed success to its strategic initiatives. Highlights include:

  • The “Values Matter” national brand campaign. “The early read is very positive, indicating a 100 percent increase in awareness for our target audience, with increases in both value perception and intent to shop versus our measured competitors,” Robb said.
  • Delivery, which Robb said provides more fresh grocery delivery options to more homes in America than any other food retailer. Average weekly online delivery sales have already passed $1 million, with online delivery sales as high as 5 percent of total sales in some stores.
  • Apple Pay acceptance, which accounts for 2 percent of sales. Whole Foods is now a leading Apple Pay retailer in both transactions and sales.
  • The 12-store Affinity test, which show high activation and registration rates and above-average basket sizes for participants.
  • Taprooms and breweries. Whole Foods Market now has more than 100 taprooms and wine bars, two breweries and more on the way.
  • Store refreshes continue, with 200 expected by year's end.
  • Reduced produce pricing, which has led to a sales lift in its test markets and improved price perception.
  • The recently launched Responsibly Grown rating system, which assesses growing practices that impact human health and the environment and prohibits some of the most harmful pesticides.
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