Whole Foods Mocks FTC By Actually Lowering Prices In Colorado Stores

Now that the Whole Foods organic supermarket chain has finally completed its acquisition of former competitor Wild Oats Markets, it’s time for the horrible price gouging we were warned about to kick in. That’s why today Whole Foods announced a permanent price reduction at all Wild Oats stores in the Rocky Mountain Region, and stated that all Wild Oats stores in its hometown of Boulder will remain unchanged. Wait—what? Of course, this amounts to mostly a publicity stunt (or goodwill gesture, depending on your level of cynicism); at least one Wild Oats store in another part of the country has already been closed.

One of the more interesting announcements following today’s completed tender offer is that the company plans to pursue “a new experimental concept called Whole Foods Market Express, featuring a value-oriented product mix, grab-and-go offerings.”

Value-oriented products? Lower prices? Maybe the gouging will happen next year. It always takes a while for these acquisitions to sort themselves out.

Resources:
“Whole Foods’ Real Work Begins” [The Motley Fool]
“Whole Foods Completes Wild Oats Purchase” [Natural Products Insider]
“Wild Oats to close; more Whole Foods may open” [The Courier-Journal of Louisville, Kentucky]

(Photo: Aaron Gustafson)

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  1. umbriago says:

    Wait a minute, are we talking about the same chain here? Whole Foods is one of the most terrifically overpriced stores on planet Earth. If you have a hankering for paying $1.50 for a 6-oz. can of cat food that’s not much better for kitty than a fifty cent can of Friskies, Whole Foods is there for you. They’ve been gouging people in the name of Green since the day they opened.

  2. azntg says:

    Yep, I can see it a year from now: “When we said permanent*, we meant permanent*! Noticed the asterisk next to the word permanent? Yes, our smart Rocky Mountains suck-er…shoppers who demand nothing, but overpriced ‘organic’ goods were smart enough to notice that if you go to the bottom of our press release, the * meant that it was valid for one month tentatively and subject to change without any notice whatsoever. Now, why didn’t you notice? Aha-ha!”

  3. Techguy1138 says:

    They could just close the store or stop stocking the existing products that are discounted. Or they could simply be cutting the profit margins on the goods across the chain.

  4. mathew says:

    It’s quite common for Whole Foods to cut prices… right up until they’ve put all the competing stores out of business. In Cambridge, MA there were leaked memos revealing that that was their strategy.

  5. yahonza says:

    Oh, I would like to hear about how whole foods is now the only available supermarket in the Boston area.

    This idea that a company can cut prices below their own costs to drive competitors out of business is a paranoid fantasy. It does not actually work.

    Lower prices = better for consumers. When did the consumerist become a shill for price raisers?

  6. mantari says:

    Not that I love Whole Foods, but it sounds like they can’t win with you, either way?

  7. Major-General says:

    @yahonza: Funny, people claim that’s what Wal-Mart does.

  8. Her Grace says:

    @mantari: Seriously. If they raise prices, they’re jerks who raise prices to scam people out of more money. If they cut prices, then they’re jerks who cut prices to make other businesses fail (which doesn’t even make sense in this context, given they’ve bought Wild Oats and are cutting prices in those stores, not undercutting those stores by building a new Whole Foods next door and pricing everything under Wild Oats).

    Is it so much to ask for journalistic objectivity?

  9. Phuturephunk says:

    That’s a fine line to walk, lower than raise to kill competition..I wonder if the Whole Foods people know the saga of A&P in New York and all their anti-trust woes.

    This could heat up and get entertaining.

  10. sleze69 says:

    Who cares if two overpriced food stores combined? There are still Krogers and Acmes and Genuadris and Giants all over the country that sell food. It’s not like organic food is a utility or something that people can’t do without.

  11. Thain says:

    Wow. I’ve never had a problem with Whole Foods/Harry’s Farmer’s Market prices, but maybe that’s because they are one of the only places we can go to get certain organic foods. You want overpriced, check out the Life Grocery Store chain. I know first hand, because my mother has to shop for a massive quantity of organic fruits and vegetables every week for her cancer therapy. Whole Foods and Life are the only places within a 60 mile radius where we can get organic ANYTHING (except for overpriced carrots at our local Ingles and Kroger). Maybe it’s just the fact that necessity makes the prices seem better, but they really don’t seem overpriced, even when compared to normal supermarket prices.

  12. bgrigson says:

    Grab and go sounds alot like the M&S shops in the UK. It is actually a great place to buy fruit, on the company dime of course. I’ve been to two M&S stores with any regularity in located at two different train stations and they are pretty busy all day.

  13. Sidecutter says:

    I live in Louisville, KY where the cited store that has “already closed” is. It’s not closed yet, that’s a month or two away, as the linked C-J article states. However, it doesn’t surprise me a bit that they would close it. It’s literally a block away from the Whole Foods. You can cross the street and it’s in the shopping center “next door” to the one Whole Foods is in.

    On top of that, the Wild Oats may be in a shopping center with some well-known places like Circuit City, World market, and Borders books, but the Whole Foods store is actually street-facing on a major road, is right next to Toys “R” Us, and right across from a major mall.

  14. killavanilla says:

    @yahonza:
    Um, you are wrong. Cutting prices below competition to clear out any competition not only does work, but has happened many, many times in the past and is happening right now.
    Where are you living?
    Ever heard of Walgreens and CVS?
    They moved into neighborhoods and took a loss until local pharmacies had to close. That’s why its hard to find a local pharmacy. I’d bet my keyboard that you use a big box pharmacy regularly. I know I do. They can sustain longer period of loss in stores because they are propped up by existing stores with dominant market share.
    Walmart has done this in many markets and continues to do it.
    Heck, the last restaurant company I worked for did it, on a short term basis.
    We were a sandwich shop in a busy area with lots of sandwich shops. When we opened, we had four days where sandwiches were FREE, one a week for a month.
    Then we lowered prices for 6 months and built up a huge base. Two out of 6 competitors shuttered their business.
    It works. It works because consumers are always looking to save a buck.
    Target offers you a $5 gift card just for switching a prescription from your pharmacy to theirs. This is just another form of undercutting the market and taking a loss to win a customer.
    It isn’t necessarily bad for the consumer, but it kills small business.

  15. phrygian says:

    @umbriago: Completely untrue. I’ve bought catf ood at Whole Foods before and it’s no more expensive than premium brands of cat food sold at other stores (e.g. Petco, Pet Smart).

    Friskies is not the same quality as the cat food sold at Whole Foods. It’s like comparing Old Roy (Walmart brand dog food) to Innova — or hotdogs to a prime cut of beef. If you’re happy feeding your cat fillers, byproducts and who-knows-what-else, then I agree that Friskies is a better choice based solely on price. Personally, I prefer to feed my cats actual food-grade food and I’m willing to pay for it. Just like I’m willing to pay extra to buy myself good-quality meats instead of “grade D but edible.”

  16. Flackette Goes Retro says:

    While I like Wild Oats a lot and hope the one here remains relatively unchanged, I’m also very happy to have a local co-op selling tons of organic food. It has been in my city for decades, and any customer can become a part-owner. Not only has it weathered having Wild Oats move into the neighborhood, but it’s expanding. Hurrah for local business!

  17. acambras says:

    @phrygian:

    Amen. When I was younger, poorer, and stupider, I fed my cat the cheapest cat food I could find. After a few months, we both paid for it — she with kidney stones, and me with a vet bill for several hundred dollars. The vet said I didn’t have to buy the most expensive cat food, but that I also shouldn’t buy the least expensive, either.

  18. vladthepaler says:

    I don’t understand the tone of this article…. are you actually complaining about lower prices? Cause, I donno, seems to me lowering prices is a good thing, and the company should be praised for doing what it said it would.

  19. rmz says:

    @phrygian: The day that my dog stops trying to eat its own crap, cat food, bugs, or any other number of less-than-restaurant-quality food items, I’ll buy him nothing but filet mignon. Until then, Science Diet or the like is fine.

  20. Seth L says:

    In my experience Wild Oats is often more expensive then Whole foods, and the stores are not very clean.

    I welcome our new organic overlords.

  21. Trackback says:

    Here, a look inside the plywooded space on Broadway that will soon open as a Mango. We think it’ll look quite nice when it opens.

  22. yahonza says:

    @killavanilla:

    I guess I should respond, because I think it is a very common misconception that you can operate at a loss long enough to drive out the competition, then make the money back by raising prices later.

    There’s a good article here:

    [www.cei.org],01529.cfm

    On why the scheme doesn’t work (and why economists agree that if it ever occurs, it is very very rare), but I look at it simply like this:

    1) there is no point in doing it if you are already more competitive than the opposition. Walmart can offer lower prices then smaller less efficient and less competitive businesses and still make a profit, so why would it ever tkae a loss? Just wait for nature to take its course.

    2) it could never work against a similar competitor, because the competitor can match you move for move (cut the same prices and take the same losses), undermining the whole strategy. More likely though, the competitor will make the strategy backfire on you, by forcing you to sell more of the goods you are selling below cost.

    The examples you give are cases where prices are lower than competition, but still profitable. Or they are just examples of a store running a sale.

  23. yahonza says:

    Sorry that link doesn’t come through cut and paste:

    “x[www.cei.org],01529.cfm”

    without the x

  24. yahonza says:

    Ah, I can’t make the link work on this editor, but you can figure it out.

  25. Trai_Dep says:

    …For the sarcasm-impaired, the article is written with “snarkiness” set to 11. :)