Whole Foods (NASDAQ: WFM) is planning to lower prices and focus on digital innovation as it seeks to stay ahead of the growing competition for organic and natural foods.
"Competition has accelerated. There's no question about it," said Walter Robb, co-CEO on an earnings call with investors. "We've seen the conventional supermarket companies like Kroger and Wegmans and HEB, they certainly have upped their game in natural and organic foods. We've seen new entrants get public money such as Sprouts, Fresh Market, Natural Grocer, they're expanding more rapidly. Trader Joe's continues to expand."
The company reported flat profits for the quarter ended April 13, and cut its profit outlook for the third time in recent months. As more traditional supermarkets and even online retailers step up their natural and organic offerings, Whole Foods plans to price assortment more competitively going forward.
"We're going to be investing more aggressively in price going forward while continuing to take our expenses down and continuing to innovate and differentiate," said John Mackey, co-CEO on an earnings call with investors.
In order to get the word out to customers about the new pricing structure, Whole Foods has been testing various marketing options in-store in the California region and also online via social media.
The company also has several pilot projects in process to further expand its digital footprint. Whole Foods in February announced a partnership with payment processor Square to offer checkout features that allow shoppers to make purchases at food venues within Whole Foods stores. This is Square's first partnership with a national grocer.
Whole Foods is also currently testing a click-and-collect program, which gives customers the option to order products online, then pick them up at the nearest store. The company launched the pilot in Plymouth Meeting, Pennsylvania and plans to expand the test in 2014 to include a Whole Foods store in Laguna Niguel, California. If the test is a success, Whole Foods could expand the system to its 320 U.S. stores.
For the quarter ended April 13, Whole Foods earned $142 million, unchanged from last year, amid higher expenses.
Revenue rose to $3.32 billion, short of the $3.34 billion Wall Street expected. Same-store sales rose 4.5 percent, hurt by the shift of Easter to the third quarter this year.
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