LAS VEGAS — To go head-to-head with Whole Foods, retailers must think “radically differently,” just as Whole Foods has done to create the powerhouse company it has become, an industry consultant told a workshop audience during the National Grocers Association's annual convention here.
With Whole Foods, Austin, Texas, achieving sales of $926 per square foot and the average conventional supermarket at just $400 per square feet, Art Turock, a Seattle-based consultant, challenged conventional retailers to change the way they approach their business model.
“Draw a line in the sand as Whole Foods has done. They think differently, and they have no need to conform with conventional predecessors.
“I invite you to cross that line,” he said, citing the examples of Metro Markets, Seattle, “which puts upscale merchandise at its front end,” and Ukrop's, Richmond, Va., “which led the industry in meal solutions 10 years before anyone else.
“Why can't that be you?” Turock asked. “As you cross that line, you will do bold things, operate with audacity and drive sales through the roof.”
Comparing Whole Foods with conventional retailers, Turock made several observations.
What makes Whole Foods unique are its product assortments, the shopping experience and the service, he said, “yet conventional grocers believe they can be slightly better in several areas to compete.
“But slightly better doesn't work because you don't get credit from shoppers for points of difference when they're only slightly better,” he noted. “And while conventional grocers are still generalists who try to serve everyone, Whole Foods is a specialist who targets customers who are well-educated, health-conscious, indulgence-seeking and cause-driven.”
He also noted that Whole Foods seeks to make money on the sale of product, rather than the slotting allowance, as conventional grocers often do.
While conventional grocers teach shoppers to look for lower prices, Whole Foods teaches them “to spend more for items that are justifiably higher because they are unique, high-quality products,” Turock said.
Yet Whole Foods is vulnerable, Turock pointed out. “When the recession came and your nickname is Whole Paycheck, you're in trouble,” he said.