Whole Foods exec says even high-income shoppers are now more cost-conscious
At the Groceryshop conference in Las Vegas, Sonya Gafsi Oblisk, chief merchandising and marketing officer for Whole Foods, shared what she said has been the largest and most impactful trend in grocery over the last few years.
It is that not some consumers, but “all consumers” have become more value-oriented and mindful of how they’re spending their money. “Even folks that have the means,” she said. Eighty-seven percent of consumers are changing how they shop to save money, according to 2024 NielsenIQ surveys.
Hoping to win in this new consumer environment, Oblisk said the company has lowered prices on more than 25% of the items in its stores over the past year, including over 1,000 of its private-label products.
“We have been — as we want to be — customer-centric and helping to support our customers eat and live better, very focused on what our value proposition is,” Oblisk said. “We are offering more deals and sales than ever before. Our weekly sales, their growth rate year-on-year is twice that of non-sale items.”
Whole Foods has long been known as a brand with premium products at high prices, even once dubbed by some customers as “Whole Paycheck.” As a result, Oblisk and her team have been investing not just in value-focused messaging, but also price-focused messaging. Oblisk joined Whole Foods in 2016, after almost eight years at low-price leader Walmart and Sam’s Club.
The company invests a large portion of its marketing budget into its weekly promotional calendar, according to Oblisk. In the stores, she said the company tries to create a “sea of yellow” for customers so that, when they walk inside, they see a lot of sale signs and know they can shop on a budget. Plus, the company offers deals associated with different days of the week, such as deals on family meals like salads or rotisserie chickens on Tuesdays, or pizza and oysters on Fridays.
Additionally, she said it’s important to offer a low opening price point that can match conventional grocers in every category — that’s driven by Whole Foods’s 365 private-label brand. She said that, because customers are so budget-constrained, it’s important to stress both absolute value — offering a low opening price point — as well as relative value.
“We want to make sure we’re playing in both of those areas,” Oblisk said. “We want a really strong opening price point, and we want [to offer] all the way up to premium brands and offerings. I actually think there’s a bit of a virtuous cycle there. The more that retailers and grocers continue to raise the bar on the quality and innovation in their private-label business, the more that encourages all of the branded suppliers to do the same.”
Private-label brands have grown 5.1% in sales over the past year, versus 2.3% growth in national brands, according to NielsenIQ.
Retailers “will continue to adopt, creating a portfolio of private-label brands that are competing with the national brands across the board that have large portfolios,” Jennie Bell, managing director of snacks and beverages for NielsenIQ, said in a separate presentation at Groceryshop. “Those are also premium private-label brands. The consumers that are looking for premiumization, they’re getting that through the private-label selection now.”
Oblisk said another key to winning in today’s market, given the socioeconomic climate and the customer mindset, is to make sure customers feel safe and comfortable within the stores. She said the overall shopping experience should be something people enjoy doing. That, she added, is reflected by how customers over the past couple of years have been drawn to grab “little luxuries,” or small, inexpensive, fun items, in the stores — a trend the company wrote about in 2023. That could be a can of milk tea or a bath bomb.
“We talk about our stores as a feel-good sanctuary,” Oblisk said. “People are like, ‘I’m stressed. I wanted to go somewhere that was calming, I went to Whole Foods.’ We really do want people to be able to feel good about every single product they buy in our stores. We spend a lot of care and thought in our store design, but equally so in our merchandising; we hope to be aspirational and inspirational, but also very inclusive and accessible.”
In addition, Oblisk discussed how customers are also more health-conscious, preferring clean ingredient labels and less-processed foods, especially given the rise in the use of GLP-1 medications like Ozempic.
“For me, it goes back to who we are as a brand. We’ve always focused on the highest quality, natural and organic foods,” Oblisk said, adding that the company has strict quality standards and has banned around 500 ingredients from its stores. “It’s not one section, or one type of food, or one brand, but rather that there’s that baseline there that can service everyone.”