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.

By Aimee Picchi Jun 5, 2013 12:06PM

File photo of a Whole Foods sign (© Tim Boyle/Getty Images)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. 


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69Comments
Jun 5, 2013 1:28PM
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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!

Jun 5, 2013 12:53PM
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They be call'd "Ho" Foods in Detroit.
Jun 5, 2013 1:56PM
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What a stupid Idea, why not make it more affordable for, everyone groceries are high enough as they sit without some chain  gouging consumers even more
Jun 5, 2013 5:55PM
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I wish I was making this up.  I rarely shop at Whole Foods because it is ridiculously expensive.  Last week I went against my better judgment and thought I'd just pick up something quick for dinner.  I went to the prepared food counter and asked for 2 fried chicken breasts.  The staffer handed me the box with a sticker stating $13.51.  I am not kidding.  I questioned her, presuming something must have calculated wrong.  She confirmed, "No, that's right, $13.51 for the 2 chicken breasts."  I handed it right back to her and walked out empty handed. I'm never going in there again.
Jun 5, 2013 2:44PM
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Well I always thought that if they Farmer uses natural fertilizer versus chemical, No Chemical Bug spray, no man made additives, that it would cost less to raise the food, so I could never figure out why the food cost more, I felt robbed, so I refuse to buy it and or visit their stores. Instead, I grow most of my own in 4 10x8 raised bed gardens using the same methods of natural fertilizers and using a weed chopper instead of weed killers and pesticides..From April to November I rarely have to buy produce at the over priced markets. Shame on me, I have real dirt under my fingernails..Gasp! How Shocking..Viewers you might want to have your children leave the room for the next statement along with any weak minded liberal adults as well. The secret to my success is.....I use animal dung to fertilize,,yes, 100% organic composted animal dung!!! and I actually touch it!!! Ooooooooooooww!
Jun 5, 2013 1:16PM
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Better headline would be "Whole country goes downscale in the world."

Jun 5, 2013 1:11PM
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All part time jobs with no benefits I'm sure.
Jun 5, 2013 7:27PM
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Guess what - all grocery stores carry healthy foods - you just have to shop in the fresh produce and fresh meats and fresh dairy sections - Skip the cookie aisle, the potato chip aisle, the frozen food aisle and the soft drink aisle. Simple. The healthy foods are much cheaper than the frozen and processed foods. Give yourself a budget of - say $10 - to make dinner for 4 - you won't get anything much more than frozen pizza in the prepared foods section. $1 will buy you 4 servings of most any vegetable, another $1 will buy potatoes, rice, or pasta, $5 will buy you enough fresh meat or chicken for 4 people. Another $2 will buy some fresh fruit.    And you don't need a PhD in chemistry to read the list of ingredients. 
Jun 5, 2013 6:58PM
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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.

Jun 5, 2013 9:15PM
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Whole Foods should be commended, not condemned for their efforts. Detroit, what with all it's foibles, is a city that needs this.
Jun 5, 2013 4:13PM
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I would love having Whole Foods try this where I live!  Trader Joe's won't put a store here because there aren't enough people with college degrees, so I have to drive 2.5 hours to get to a TJ's or Whole Foods!  Needless to say I don't do this, but when I travel to Phoenix or San Diego I make sure to make a stop before heading home!
Jun 5, 2013 5:10PM
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Wow!  Good luck to Whole Foods.  We need to get Americans healthy again.  Back in the Roman days  rich people were fat.  Seems now in America financially strapped people can NOT afford healthy food.  I hope Whole Foods beta test is a success! 
Jun 6, 2013 9:57AM
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I looked at the back of a 365 frozen food box and discovered it was from China.  How can they guarantee it is organic?  There are actually videos on YouTube about this.
Jun 5, 2013 9:40PM
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I honestly believe that Whole Foods has done a great service to the people who live, work and study in Detroit.  To disparage WFM with the charge that prices are too high, must come from critics that have never had to resort to a convenience store or gas station for a meal.  I'd rather pay a little more at Whole Foods and know I'm getting some healthy options. 
Jun 5, 2013 9:05PM
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It would be a step up for many poor people in these food wastelands like Detroit to have anything besides having to buy your milk and bread at a liquor store.  Chicago is the same way, at least in large areas.  If cities could get something like Aldi or Sav-a-lot etc, anything would be better than nothing.  I can't even afford to shop at Kroger anymore, so I'm shopping at the smaller stores now, but try to find something basic, as an example, apple jelly at Aldi, and you won't find it.  But they do have many things that are at good prices, even if you have to rent the shopping cart. 
Jun 6, 2013 2:34PM
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Who needs Whole Foods products any way? Please go to an "organic " farm and dairy and see for yourself.   Or actually find  what it means.
Jun 5, 2013 1:34PM
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I don't see why cutting back on staffers means that they will spend less and have anything to do with their prices. It seems to me as though they are like Walmart and don't want to pay their employees.
Jun 5, 2013 6:00PM
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Paid for with ebt cards so what difference does it make
Jun 5, 2013 5:18PM
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Yeah , I can see the fine residents of Detroit going to WF to get their brown rice sushi and chi tea for lunch.
Jun 5, 2013 3:19PM
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This store is doomed to fail.
Not many self-important yuppie elitists living in the city of Detroit. 

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