Whole Foods goes downscale in Detroit
Often called 'Whole Paycheck' by price-stunned shoppers, the grocery chain is testing a more affordable option in less-affluent areas.
Whole Foods Market (WFM) has a reputation as the place where upscale yuppies stock up on gluten-free brownies and free-range eggs. While Whole Foods might be chock-full of organic produce, it's not exactly known for its bargains.
Now the grocery store is taking a step back from its nickname, "Whole Paycheck," through a pilot test of three lower-priced stores. One is opening Wednesday in economically depressed Detroit, while the other two will open in New Orleans and Chicago's South Side later in 2013 and 2014, Adweek reports.
The pilot stores will aim to lower prices by cutting back on staffers and offering more frozen and wrapped items, Whole Foods co-chief executive John Mackey told the publication.
"For every penny we cut off the price, we reach more people who can afford to shop with us," he said. Nevertheless, Mackey balked at the idea that Whole Foods is unaffordable for many consumers.
"The premise that the healthy food we sell at our stores is expensive or elitist is false," Mackey said. "If you know how to cook and if you buy whole grains, beans and produce, you don't need to spend lots of money."
Whole Foods' relatively plump gross margins tell another story, though. They hover between 34% to 36%, while those at Kroger (KR), the biggest supermarket chain, sit at about 20%, according to CSIMarket.
Whole Foods is also taking an unusual step by trying to teach Detroit customers to shop frugally, offering classes at community centers, Adweek notes.
The Detroit store's opening took 15 years of development, a period during which the city's finances spiraled into critical territory. Detroit's new financial manager last month issued a scathing report about its financial straits.
Opening a store in the troubled city will prove an interesting test of whether Detroit's population has the interest -- and extra change -- to afford the grocer's organic spinach. Most Whole Foods stores are in tony spots such as Napa, Calif., and Kahului on Hawaii's Maui.
Peter Cummings, the chairman of Ram Realty Services, which helped finance and develop the Detroit property, told The Wall Street Journal he believes Motown will evolve into a city with a smaller population but with strong neighborhoods.
"It will be reinvented," he said. "Repopulating the city with a younger population is real."
Follow Aimee Picchi on Twitter at @aimeepicchi.
Why not take prices down all across the board allowing more customers to enjoy the bennies of organics in all locations.
Some of your prices are outrageous compared to the same product sold elseware. Maybe the time has come if WF really wants to top the market to lower their price of everyday common prepakaged foods als available at Kroger Safeway and Fresh Foods!
Better headline would be "Whole country goes downscale in the world."
If you stick to their 365 store brands and don't buy meat or veggies you can shop at Whole Foods for almost the same price as you can at Kroger or other national chains. I would never shop there for my weekly groceries but there are 10-20 items from Whole Foods that I love.
I've shopped at the WF in Ann Arbor Michigan and I love it, but offering valet service is a bit much at a grocery store.
Not many self-important yuppie elitists living in the city of Detroit.
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