Will Economy Eat
Whole Foods' Organic Lunch?
by Sarah Mahoney, Wednesday, Nov 5,
2008
Media Posts's Marketing Daily
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
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