Will National Ads Help Whole Foods?

In a conference call to detail its earnings last week, the brass at Whole Foods Market let slip that it was planning a national ad campaign, its first-ever.

“With fewer than 400 stores and a marketing spend of less than 1% of sales, it is impressive how widely recognized the Whole Foods Market brand is,” John Mackey and Walter Robb, co-CEOs, told investors. “Our brand and marketing campaign will highlight both our value and values, reinforcing our leadership around quality and transparency in the marketplace.”

They say that the effort will focus on the launch of the Austin, Tex.-based retailer’s new “Responsibly Grown” rating system for both produce and flowers. Like its “5 Step Animal Welfare Rating,” the new effort is intended to help customers make better-informed choices about pest management, farmworker welfare, and the protection of pollinators. “Natural and organic products are increasingly available, but no one does what we do,” the execs say, adding that these rankings will “raise the bar another level.”

But the announcement comes at a tricky time for the food retailer, which has seen its growth slow in recent quarters, and observers question how it will be able to maintain the niche that has made it such an enduring brand.

Other new initiatives announced on the call include home delivery and customer pickup in 12 to 15 major markets, its first online subscription club, a new affinity program, and a new mobile app, which it promises will “dramatically improve” both mobile and digital shopping, “before, during and after visiting our stores.”

Are all these good moves? Potentially, writes analyst Chuck Grom, who follows the stock for Sterne Agee. “Favorably, we see some promising traffic-driving initiatives in the pipeline,” he writes, including the new ad campaign and digital initiatives. But for now? Based on the fierce competition Whole Foods faces, “we prefer to stay uninvolved.”

Among national natural food chains, Whole Foods is already in first place in Brand Keys’ 2014 loyalty rankings. (Fresh Market is No. 2, followed by Trader Joe’s and Sprouts.)

“There are some real logistics as to why that is,” explains Robert Passikoff, Brand Keys 

founder and president. “The brand has been around since the early 1980s, and expanded in part with acquisitions, and competed primarily with locally owned, hippie-dippy health food stores. And then it was well positioned, as the Internet came to the fore and consumer interest in sustainability and healthier food was growing. It was the right brand at the right time, and word-of-mouth was going to do it.”

But ads meant to increase awareness aren’t likely to help Whole Foods boost sales,” he says. “Awareness often isn’t the issue. Everyone has heard of Rolls Royce, for example, and almost nobody owns one.”

For Whole Foods, he tells Marketing Daily, it’s instead about winning engagement. “And the Kroger’s, Giants and Wegman’s of the world, which already has this audience, has been able to add value by increasing their organic and natural offerings.”

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