Whole Foods has thrived in urban areas where the company can charge high prices for items with little resistance from urban shoppers, however as the company expands into suburban areas it hopes to ditch the “Whole Paycheck” nickname that follows around the stores pricing.
The upscale grocer hopes to shed that reputation by offering more price promotions on various items, providing discounts to regular shoppers and even keep certain item prices flat as the cost of those goods continue to rise.
The strategy is amusingly called “price perception” and the goal is too make shoppers feel as if they are getting good enough deals on certain items that they ignore the ultra-high cost for other products.
In the meantime the push makes sense in suburban centers where Whole Foods pays less for rent and has less competition, this allows them to push down pricing slightly while still charging ultra-high prices for items that are hard to find in suburban areas.
While the move may be a smart decision on the company’s behalf their established customers spend three times more money at Whole Foods locations then new customers which means alienating those customers with changes to store pricing could cause the company to lose much of their new found suburban profitability.
In any case the company opened six new stores in the most recent quarter which means the new strategy is likely to be realized sooner rather then later.
Do you like the new pricing strategy Whole Foods is implementing or can you see right past the company’s “price perception” program?