• by Sarah Mahoney , November 5, 2008

It looks like even Whole Foods Market shoppers are watching their wallets. The Austin, Texas-based food retailer says that while it saw a total sales increase of 13% for its fiscal fourth quarter, comparable-store sales gained just 0.4%, compared to an 8.2% increase in the prior year.

 

Identical-store sales fell 0.5%, compared to a 6% increase in the same period a year ago. And the trend is worsening: For the first five weeks of the first quarter, which ended this week, the company says comparable-store sales slid 2.1%, while identical-store sales decreased 3.3%.

The company also says that it isn't making any predictions. "The uncertain and rapidly changing economic environment makes it highly difficult to forecast future results," it says in a release, adding that it will not give sales estimates.

Marketing experts in many categories are closely watching Whole Foods as a bellwether of organic performance, to see if the widespread acceptance that organic products have earned with consumers holds up in tough economic times.

A recent analysis by Nielsen reports that organic sales now total $4.7 billion, with dollar sales up 23% and unit sales up 20% compared with a year ago. But as the economy worsens and grocery prices continue to rise, that growth has slowed. In the most recent period (through early September, before October's market meltdown), growth slowed to 13% for dollar sales and 8% for unit sales.

Many industry groups predict that the health, wellness and environmental concerns that prompt loyalists to shop organic will not be shaken--or at least not by much--by a faltering economy, and that Gen X and Gen Y organic lovers will ensure that "organic products will be commonplace by 2025," Nielsen says--adding that the Natural Marketing Institute expects growth will taper off to about 10% in 2008 and 2009, and 5% by 2020.

And while organic foods currently only account for about 1% share of most categories, some marketers estimate that organics will comprise 13% to 27% of U.S. pantries by 2025. (Milk and fresh produce are two exceptions, with organic share of each above 5%.)