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In tough economic climate, Whole Foods is touting its value
Thursday, September 25, 2008

For years, Whole Foods Market has been disputing the oft-repeated joke that the natural foods grocer should be called, "Whole Paycheck." It was easy to shrug off the teasing when the economy was strong and aspirational shoppers were willing to pay more for what they saw as better quality.

These days, it matters a lot. As grocers of all sorts jostle to be the place to help consumers through tough times, Whole Foods has begun staking its claim, too, offering guided "value tours" of stores around the country.

At the company's East Liberty store, a tour conducted last week illustrated the challenges and opportunities for a specialty grocer trying to argue there are still good reasons to invest in the products it offers.

There's value and then there's value.

"We're not going to focus this tour on price value," said Mark Bremer, an associate team leader for grocery who was assigned to lead this particular expedition through the aisles.

Take, for example, the importance of sustainability issues, he said. Farming practices that Whole Foods uses ensure consumers are getting healthy fish not caught through practices that endanger species. "There's great value in that."

His audience that day consisted of two friends from Wexford and a reporter. Since the expeditions in the East Liberty store began a couple of months ago, they've varied in size. One time, only one man showed up. Another time there were a lot of people and other shoppers joined in.

Tours involve foodie talk, and helpful hints on ways to eat healthfully and perhaps cut costs a bit. And the staff distributes lots of samples. Come hungry.

This venture began in the small dining area where a white-jacketed Lon Durbin, who joked he could be called a culinary artisan or a food dude, cooked up a Creole sauce filled with onion, sweet pepper, tomatoes, parsley, spices and butter. He handed out a recipe card that priced ingredients for enough sauce to serve four people at $6.39.

That didn't include the shrimp served in the samples. He said the bag of frozen Whole Catch seafood cost $5.99 and suggested the sauce worked just as well over chicken thighs, a less expensive cut of meat.

Sounding a note that would be repeated through the tour, he included a pitch for the home team. "I do think our store brand items are excellent values."

The movable feast headed on to produce, where employee Ashley Allen whipped a knife out of her tool belt to cut slices of organic Honeycrisp apples, selling for $3.49 a pound. Conventional Honeycrisps were available for $2.49 a pound, she noted.

In seafood, the tug between price values and other values couldn't be missed. While the overall vibe is on the best in natural and organic foods, there is growing acknowledgement that consumers are watching their pennies.

Customers ate samples of salmon and scallops as employees reveled in the quality of glistening specimens in the fresh fish display. Salmon came from farms in Scotland and Norway where, the tourists were told, waters are tested daily. Chilean sea bass fillet, at $21.99 a pound, was certified by the Marine Stewardship Council.

But then the host in his fisherman's orange overalls turned to bags of private label frozen fish nearby. "All of these are going to be much cheaper than any fresh fillets," he said, noting it's been a bit of a chore educating people that just because Yellow Fin tuna steaks -- $6.49 for 12 ounces -- turn darker when frozen doesn't mean they don't taste almost the same.

He also offered tips for those still trying to make the budget stretch for some of the finer things. While the least expensive smoked salmon in the refrigerator case was running $12.99 for a half pound, he pointed out that the smoked salmon trimmings could be had for $12.99 a pound.

A recent survey by consulting firm TNS Retail Foward found 26 percent of shoppers pinched by high gas prices were heading more to so-called discount and value formats. Even fans of upscale and specialty retailers are shopping those places less often as they hunt for deals elsewhere.

Whole Foods is trying to show it has deals, too, for those whose values insist on natural foods.

Two eight-packs of Nature's Rancher uncured beef hot dogs -- samples were offered -- had been packaged together and the four pounds of meat sold for $10.99. "We put them in these big packages so we can sell them to you cheaper," said Jess Myers, who was hosting the meat department tour.

She pointed out that buying in bulk sometimes meant deals. Buying more than three pounds of sausage, for example, qualified for $1 off, while three pounds of pork spare ribs selling for $5.99 a pound triggered a 50 cents off deal. "They're having a harder time selling a lot of meat, so they want to put some on sale," she said.

Touring consumers were offered Fage, a Greek yogurt the employees said was priced lower at $1.79 for 7 ounces than anywhere else in town. One participant wasn't so sure, saying under her breath she'd seen it on sale at Giant Eagle for a similar price.

A number of items in the store flaunted small orange and white hang tags that said, "More of the good stuff for less." That, Mr. Bremer said, means company research had found the prices were equal to or less than those offered by competitors.

Shoppers with brown Whole Foods grocery bags saw a similar message -- "I just got more of the good stuff for less" -- on the side.

In a report issued earlier this month, an analyst for Jefferies & Co. Inc. described the macroeconomic backdrop as horrendous. "Whole Foods relies on wealth creation; wealth is now being destroyed," wrote Scott A. Mushkin. Yet, he argued Whole Foods had taken prudent steps to cope and could start putting up better results in the next few months.

The company has slowed the cost and number of new store commitments, he said, as well as reducing corporate head count, eliminating its dividend and cutting corporate spending.

Karen Boujoukos, a Wexford resident who'd never been in the Whole Foods store before, asked Mr. Bremer if more locations might be coming to the Pittsburgh area. He'd heard talk of potential sites in the South Hills, Cranberry and Monroeville but had nothing definitive to tell her beyond his understanding that the overall plan is to have three stores in the market eventually.

Ms. Boujoukos discovered the value tours as she was checking information on Sur La Table, a cookware retailer with a location at SouthSide Works. She brought along her friend, Marie-Claire Muller, a native of Luxembourg who had been to Whole Foods before.

They asked questions, showed their familiarity with even the exotic yogurts and fish. When a horde of customers descended on the samples of cherry pie, they seemed bemused by the rush of activity. Ms. Muller winced at stacks of energy bars with lots of orange labels, noting she generally can't stand the things.

When Mr. Bremer explained the labels meant those prices were competitive, she asked, "If I find it cheaper, can I come here and get the price?" Sure, responded the energetic employee who seemed to appreciate the give and take.

He wrapped up the visit with a final gift bag that included a can of tuna, vanilla wafers, peanut butter, organic cream of mushroom soup and a boxed macaroni-and-cheese mix that he said was popular. "We go through, like, two cases a day of this stuff."

The parting gift also held a copy of the grocer's Whole Deal newsletter. Mr. Bremer noted that it was available on stands inside the front door but said a lot of people never even notice the coupons inside.

Teresa F. Lindeman can be reached at tlindeman@post-gazette.com or at 412-263-2018.
First published on September 25, 2008 at 12:00 am