The executives at Whole Foods know how hard it is to keep consumers happy. When the chain opened, they captured a segment of the market that was interested in organic and natural food items. The 417 store chain does a good job meeting customer demands, but that service comes with a hefty price tag. Shopping at Whole Foods is not a money-saving experience, and that means the company is losing market share to chains like Kroger and Publix.
Giant food chains like Whole Foods can’t afford to lose market share, so rather than lowering prices and losing profit margin, the executives at Whole Foods have decided to open a lower-priced version of itself. The stock dropped by 11 percent recently.
The food business like other businesses is a cut-throat business. Margins are low and operational costs continue to increase. Whole Foods needs to do something to keep consumers walking through the doors. A new chain sounds like a good idea, but it may also be a big profit drain for the parent company which Flavio Maluf expects.