A new study shows that Whole Foods Market  appears to be making progress in its effort to make its pricing more competitive.
Wells Fargo Bank, which recently initiated coverage of Whole Foods and The Fresh Market , as well as vitamin and supplement retailers GNC and Vitamin Shoppe, said it found that Whole Foods’ prices beat those of Pleasanton, Calif.-based Safeway  by 7% on a basket of 100 items.
“Overall, we were surprised to find that Whole Foods’ prices were much more competitive than we expected,” said Kate Wendt, an analyst at Wells Fargo.
The study found that Trader Joe’s  prices were 4% lower than those of Whole Foods, but Whole Foods beat Sprouts Farmers Market  on price by 3%, The Fresh Market by 14% and Amazon Fresh by 27%, in addition to Safeway.
“Given that Whole Foods arguably already offers the best-quality products, we believe that as the company continues to invest in price and consumers increasingly recognize that its prices are not actually as high as they think, those looking to find healthy, natural and organic products will start making more trips to Whole Foods,” Wendt said in the report.
Whole Foods — once branded “Whole Paycheck” by consumers for its premium pricing — has been working for several years to change that image.
The report was also bullish on Whole Foods’ growth opportunities given its more aggressive expansion, favorable real estate opportunities and consumers’ interest in the brand.
“The reason our panel does not shop at Whole Foods or does not shop more frequently is predominantly the lack of a store nearby,” the report explained.
Whole Foods said it sees the potential for 1,000 stores in the U.S. — more than triple its current presence — and in recent conference calls with analysts said it has been eyeing smaller locations. In late August it opened its seventh and smallest location in New York City at a reported 38,000 square feet.
In a recent interview with the Chicago Tribune, Walter Robb, Whole Foods’ co-chief executive officer, said the chain has also been exploring the opportunities presented by so-called “food deserts” — areas that are underserved by grocery stores. The company has been in talks to open stores on Chicago’s South Side, for example, and in Newark, the article said. Next year the chain is entering an underserved area of Detroit.