(Health Secrets) Speculation about how Walmart’s planned expansion of its organics line will affect others in the healthy food business, including Whole Foods Market, is growing throughout the media. Some investors are now looking at a recent earnings miss by the grocery giant as a possible indicator that Whole Foods may not be doing as well as we all thought, especially with new competition on the horizon.
Yahoo Finance, for instance, recently reported that Whole Foods’ stock plummeted about 20 percent following a recent earnings miss, which may have been the result of the recent Walmart announcement. Does Walmart really have the opportunity to undercut Whole Foods and possibly even capture some of its market share, expanding its already predatory business empire?
Not exactly. Though increased competition could force Whole Foods to lower its prices — this is obviously not a bad thing — it is probably a stretch to assume that the upscale clientele normally found at an average Whole Foods store is suddenly going to flock to what is widely recognized as one of the sketchiest big-box retail stores in the country.
Let’s face it: Walmart is hardly the type of place where educated, health-conscious folks looking for grass-fed meats and pesticide-free produce are going to shop. And it would be disingenuous to suggest otherwise, even though Walmart’s prices for certain organic products are sure to be lower than Whole Foods’. At the end of the day, Whole Foods is much more of a one-stop shopping destination for clean food, something that Walmart will most likely never be able to claim.
“I spent several years in the grocery business, and Whole Foods is not going to lose a lot of customers to Walmart,” wrote one Yahoo Finance commenter. “Whole Food’s clientele is upscale… their customers don’t overlap with Walmart’s. Whole Foods offers a unique, varied and smart product choice and placement throughout their stores. Walmart won’t equal the number of organic or non-GMO products that [Whole Foods] does and can offer.”
Though imperfect, Whole Foods can stand its ground
Whole Foods isn’t perfect, of course. As we’ve covered on other occasions, Whole Foods still sells some products containing genetically modified organisms (GMOs) for instance, and also uses unhealthy oils like canola oil in its fresh foods bar. But overall, Whole Foods still retains a strong brand presence and projects an image of health that is much more believable than anything coming out of an average Walmart store.
Whole Foods is also already having to compete with others in the industry like Trader Joe’s, which offers many of the same healthy food products sold under private labels at a reduced cost. As the market adjusts, Whole Foods’ will most definitely have to adjust a few things, but the company will hardly face a crisis if it plays it smart.
“If you think a Whole Food’s [sic] customer is going to start buying groceries at Wal-Mart, you shouldn’t be in the investment analysis business,” wrote another commenter.
“Whole Foods is opening stores in profitable locations with lots of well-heeled customers, in places like Minneapolis, San Francisco, Denver and Boston. Their core customers don’t care if a head of lettuce is 35 cents cheaper at Walmart or Trader Joes; they’re also buying brie, chardonnay and expensive body lotion that you can’t find at those stores.”
What do you think about Walmart’s announced adoption of more organic products, and how this decision will affect other companies like Whole Foods?
And don’t miss:
Whole Foods Markets Promises Full GMO Labeling by 2018
For more information: