Whole Foods is getting beaten at its own game

Entire Meals has a paradoxical drawback: Its merchandise are simply too fashionable.

The high-end grocery chain stated it will shut 9 shops final week after a yr and a half of falling same-store gross sales.

But paradoxically, the natural meals craze it pioneered has by no means been greater.

Responsibly-sourced groceries now see the kind of demand of which Entire Meals might solely dream throughout its early many years of relative obscurity. 

However there is a catch: All of the fuss over natural fare has drawn the attention of mass-market rivals like Kroger, Walmart and Costco which may simply undercut the shop's steep costs. 

Shoppers not have to make the journey to a specialty retailer once they can discover the identical labels at their native grocery store or big-box retailer for cheaper.

"The extra typical mainstream supermarkets have upped their recreation," Entire Meals CEO John Mackey stated in an earnings name final week. "We will do the most effective job that we will to maintain our core clients from migrating again over to these guys."

Mackey in all probability by no means envisioned this drawback when he based Entire Meals together with his then-girlfriend in 1980. The unique Austin, Texas retailer was a unusual well being meals store referred to as SaferWay, a spoof of Safeway. The couple lived there and showered with a hose hooked up to the dishwasher.

The corporate guess that buyers would pay a bit additional money for brisker, cleaner meals nicely earlier than anybody cared what "natural" meant.

The prediction paid off massively when consumers began to place extra weight on meals security within the early 2000s.

Natural meals gross sales have steadily climbed all through a lot of the time since, based on the Natural Commerce Affiliation. Till just lately, Entire Meals had grown with it, doubling its variety of shops from fewer than 200 in 2006 to greater than 400 at present.  

"We have been ignored for many of our historical past. No one paid any consideration to us," Mackey stated in final week's name. 

"However we continued to broaden and develop and we obtained increasingly profitable, after which the traditional supermarkets ... started to pay extra consideration."

The corporate grew extra slowly after 2008, as mass-market rivals elbowed their approach into the area. By 2015, these rivals collectively managed a lion's share of the natural market — round 53 %.

Entire Meals is now desperately looking for methods to slash costs with out sacrificing the standard its clients have come to anticipate.

Its largest venture in the direction of that finish is a brand new sort of retailer referred to as "365," which is aimed toward cost-conscious millennials. Knowledge exhibits that natural meals consumers are overwhelmingly between the ages of 18 and 34.

Mackey stated the chain may even sluggish its enlargement plans to re-focus on its "core...Entire Meals-y clients" to stop them from fleeing for cheaper options. It's mailing nationwide coupons for the primary time, and steadily chopping costs at lots of its places.

"I do assume the world could be very totally different at present than it was 5 years in the past," Mackey stated within the name. "And Entire Meals is adapting to the brand new world it finds itself in."