Amazon is dramatically reducing prices at Whole Foods to attract new customers and bring back those who left to find lower-priced natural and organic foods at traditional super markets. The lower price strategy may be just what Whole Foods needs to win back customers after same store sales have dipped over the past two years. But will it be enough?

Why lower prices will work for Whole Foods:

• High prices are a key reason long-time Whole Foods customers left and competitive prices should bring many of them back.
• Millennials are driving large increases in produce sales and have a healthy appetite for high quality organic fruits and vegetables.
• Whole Foods shoppers may be able to order some items online not stocked at their local store and pick them up at the store.

Why lower prices won’t work for Whole Foods:

• Already in a price war, large super market chains have been lowering their price points even further – so low Whole Foods may not be able to match.
• Convenience is important, especially to Millennials who prefer one-stop grocery shopping. Even if Whole Foods shoppers can order other items online and pick up at the store, it still requires an additional step.
• Lower margins will make it more difficult to absorb the costs of home delivery – a strategy Whole Foods would like to pursue.

Time will tell. Stay tuned.

C-stores get an “A” for growth. While many brick and mortar stores have been closing, the convenience store industry has actually doubled in size over the past 30 years and is still growing. In 2016, the number of c-stores in the U.S increased to 154,535 and experienced record in-store sales of $233 billion.

Key sales driver – C-stores account for 80% of all the auto fuel purchased in the country.

Fill-up & light-up – Gas and cigarettes are still the most popular c-store purchases followed by beer, non-alcoholic drinks and foodservice (prepared food) items.

Mouth-watering margins – Foodservice is becoming the c-store industry’s most profitable category, contributing over 21% of in-store sales in 2016.

Hungry for change – Sandwiches, hot dogs and pizza are still the most popular meal items, but healthy options such as salads, yogurt parfaits and fruit cups are increasingly in demand.

Fresh opportunity – 76% of 18-34 year-olds would purchase more prepared foods from c-stores if the foods are designated as local, natural, and in environmentally friendly packaging.

Core customers – Consumers aged 35-44 are more likely to be daily or weekly c-store shoppers, and those 25-34 are more likely to buy in-store merchandise after purchasing gas.

Older, not so much – Customers, aged 55 and up, are less likely to make daily or weekly c-store visits or to stop in for a post-gas merchandise purchase.

Whoa! – Texas has, by far, the most C-stores with 15,671. That’s one c-store for every 752 residents of the Lone Star state. California is a distant second with 11,774, one c-store for every 3,355 residents.

 

#1: September 1987 – A baby chokes to death on a rubber ball inserted into a Cheerios box as a free premium toy. The “Powerball” toy had passed all Consumer Product Safety Commission (CPSC) tests for children under the age of two.

However, the elderly person who was babysitting the child had dexterity problems and couldn’t remove the ball. The EMT who first arrived easily removed it – unfortunately too late to save the baby. The Powerball passed the truncated cylinder test (too large to fit inside it) so General Mills was not technically at fault.

General Mills had to decide: Alert consumers about a premium that passed all CPSC tests and risk damage to the company’s most valuable brand or allow the promotion to run its course. General Mills did the right thing and alerted the media that it was pulling the remaining Cheerios boxes with the free “Powerballs” inside off store shelves. It was costly, but doing the right thing did not cause any long-term damage to the company or the Cheerios brand.

#2: 2007 World Economic Forum – Kofi Annan, former Secretary-General of the United Nations meets with General Mills CEO Ken Powell. They talk about the plight of millions of malnourished and underfed people in Africa. Kofi asked, “Is there something a global food company, like General Mills, can do to help these people?”

That was the challenge that started an internal program at General Mills. A program that led to the formation of Partners in Food Solutions in 2011, an independent, non-profit organization. Soon other major food companies including Cargill, Hersey, DSM and Buhler joined General Mills’ vision of improving food security and economic development across Africa.

Leveraging their knowledge and expertise of food production, hundreds of volunteers from these food companies donate their time to help food producers across Africa. By helping to improve the capacity, efficiency and product quality of local food processors, Partners in Food Solutions seeks to advance food security in the African countries that need it most.

Over the past five years, Partners in Food Solutions has grown to nearly 1,000 volunteers helping over 800 small food companies in seven African countries.

Bob Andersen is freelance writer and former employee of General Mills Inc.