Even the mighty Whole Foods Market (Nasdaq: WFMI ) isn't immune to penny-pinching nibblers.
In a move to jump-start its recession-spanked prepared-foods business, the organic grocer is emphasizing value-priced offerings, including a meal for four for a mere $15.
"A lot of the value programs that we have instituted, which we will continue with, will be good for us," says COO A.C. Gallo in an interview with The Wall Street Journal.
Prepared foods have been a high-margin endeavor for the low-margin supermarket industry, but cost-conscious consumers are bypassing the food warmers and simply buying the raw ingredients to make their own meals at home.
Whole Foods is a premium retailer, and consumers expect to pay top dollar for high-end natural and organic foodstuffs. However, the Whole Foods homepage shows that the value message is alive and well -- even at the company that is often derisively referred to as "Whole Paycheck" for its fabled ability to gobble up salaries.
- "What's on sale?" reads a banner, with a dropdown menu to "choose your local store and download the sales flier PDF!"
- "When the highest standards meet the lowest prices, it's easy to clean up," reads one of the three rotating graphics on top, promoting the store-brand shampoo and conditioner.
- In a "Chill Out" entry, readers are encouraged to "check in with the Value Guru for tips on staying cool and putting your budget worries in the deep freeze."
Whole Foods has a Value Guru? Really?
Really. Premium brands have had to roll with consumer expectations. Even the mighty Starbucks (Nasdaq: SBUX ) has resorted to value meal pairings. Chipotle Mexican Grill (NYSE: CMG ) (NYSE: CMG-B ) has always been the class of quick-service joints, but it too became Cheap-otle earlier this year. The upscale chophouse Morton's (NYSE: MRT ) is promoting steak and seafood specials on its steakhouse's website, along with $4 drinks and $5 or $6 appetizers during Happy Hour.
Inflation watchers know that it's cheaper to eat these days. The food-price component of CPI hasn't seen a monthly uptick since November. This naturally benefits the warehouse clubs, as thrifty shoppers buy in bulk at Costco (Nasdaq: COST ) and BJ's (NYSE: BJ ) to get more bang out of their bucks. However, this also gives premium food companies the pricing flexibility to offer the kinds of deals that consumers have come to expect.
The trick here is weaning consumers off the value meals when the economy does bounce back. The only thing harder than swallowing your pride long enough to mark down the edibles is retaining the penny-pinchers once prices head higher.
What are you doing to spend less on food these days? Share your budgeting tips in the comment box below.
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