Whole Foods (NASDAQ:WFM) has been trying to shed its reputation for overpriced organic food with several new stores and initiatives, and a new report suggests it may just be making progress in one major market.
According to a study by Bloomberg Intelligence, the high-end grocery chain, whose prices earned it the nickname "Whole Paycheck," is actually one of the cheaper options in Manhattan. A basket of 97 items might ring up at $391.39, below competitors' rates at groceries such as Fresh Direct, Gristedes, Food Emporium and D'Agostino.
"Last year, for the first time ever, we implemented a significant competitive price match on hundreds of grocery items at a national level," Whole Foods Co-CEO Walter Robb said during the company's third quarter earnings call in July. "Our focus going forward is primarily on perishables where we see opportunities to narrow price gaps on select known value items, broaden our selection of products at entry-level price points, and increase promotions."
The chain has also been moving into lower-income neighborhoods in an attempt to capitalize on untapped potential in food deserts across the country. Whole Foods already attracted plenty of attention when it opened its first store in Detroit, announcing last year that it has plans to open an 18,000 sq.-ft. store in Chicago's Englewood neighborhood in 2016.
The new location would create 100 jobs and put more than 2,500 residents within a mile of a grocery store. Currently, the neighborhood has a limited-selection Aldi store, but the closest full-service grocery store is more than two miles away.
However, Whole Foods' new approach still has its skeptics. "You can't just plop down a grocery store and expect everyone overnight to make healthy food choices," Mari Gallagher, a consultant and researcher who studies food deserts, told CNN Money last year when the Englewood store was announced.
There's also the not-so-small matter of pricing. Concern about the performance prospects of a high-priced grocer in low-income neighborhoods is well-founded, but according to Robb, the chain's Detroit location has performed beyond expectations, and successful pricing in Manhattan suggests the retailer may have learned some valuable lessons.
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