Whole Foods lowering prices

According to Whole Foods

The goal of cutting pricing is to increase market competitiveness. It intends to compete with smaller supermarket chains that have been selling organic food at a lower cost. Looking at this objective from a single angle, Whole Foods is on the correct track. People are increasingly aware of the need to eat healthily, and as a result, they are increasingly turning to organic food. As a result, the market for organic food products is expanding, drawing new players in natural grocery and manufacture. This means that in a short while, this market will be saturated and firms will be forced to target other areas to attract customers, for instance, through lowering prices. Whole Foods has already noted that there are grocery stores that are as good as it is and are offering lower prices. Therefore, reducing its prices will give more competitive power in the market.

On the other hand

Lowering prices to compete with smaller business will decrease its business opportunities. Currently, Whole Food is among the key players in the American whole foods market. The company has a brand equity that makes it unique on the market. As noted in the article, reducing prices will mean fewer varieties, which will jeopardize the brand value it is associated with. Customers will not find any difference between purchasing at a smaller grocery store or buying at Whole Foods; it will, therefore, lose a majority of its clients and its current market share. Alternatively, Whole Foods would realize opportunities by changing its operation strategy from being a retailer. By doing this, it would cease competing for the consumer market and instead compete with the suppliers. Resultantly, it would also reduce the cost of operations which would be reflected in the prices.

In conclusion

Although, in some cases reducing prices means attracting more customers, in the case of Whole Foods, it may lead to a reverse effect due to its high brand value. Therefore, there is a need to look for more complex solutions as, for instance, changing the strategy, which will allow reducing operation costs.

Reference

Friedman. M. (April 21, 2017). Whole Foods is finally going to lower its price. SF Gate Retrieved on April 30, 2017 from http://www.sfgate.com/food/article/Whole-Foods-to-get-cheaper-to-win-back-customers-11084249.php