Now that the season of eating is upon us, we thought what better way to celebrate than to take a retrospective look at one of the U.S.’s largest health food retailers, Whole Foods Markets. For a company that has “market” in their name, Whole Foods Markets has previously resisted implementing marketing their brand to outside customers. In fact, it is one of the few consumer product companies in the Fortune 500 that has never deployed a national ad campaign. That is, until the last few months, when the company finally decided to launch a $20 million national ad campaign complete with TV ads and print advertising in national newspapers.
So what caused this significant change of heart? It is most likely due to the level of discontent on the part of the shareholders after finding Whole Food’s plummeting performance in the stock market in 2014. Granted, Wall Street has not been kind to most natural food stocks for 2014, but Whole Foods is seeing a trend that they would like to put an end to. Whole Foods is still paying out dividends, expanding, and showing significant profits, however, same-store year-over-year sales growth has missed its earnings targets for three quarters in a row. This drop in sales growth was directly reflected in a 19% stock market plunge on May 7, 2014. The continued drop in the stocks made WFM the worst performing stock all of the S&P in May, reaching a 34% year-to-date drop by the end of the month. This downward slope was significant enough for the c-level executives at Whole Foods to take notice and recognize that something needed to change before the decline got out of control. Marketing to the rescue!
The company’s first-ever national ad campaign is united by the tagline “Values Matter,” featured at the bottom of each print ad and at the conclusion of each TV ad. The TV ads are visually compelling and “artistic” in their presentation of the brand. They feature Steadicam shots of happy cows strolling off to pasture, day boats conquering ocean waves, and orange pickers working hard to pick only the best oranges. The first print ads featured a mixed-race woman with a young boy on her shoulders, with the tagline “Values Matter” at the bottom of the page. Nowhere in the print ads will you find pictures of food. That raises the question, for the company’s first ad campaign, are they doing it right?
Critics of the campaign feel as though the imagery looks too expensive. And that is a problem for a company that has the moniker “Whole Paycheck” associated with their brand because they are known to have overpriced goods. Advertisers often like to make their ads into works of art, and in certain scenarios that is appropriate. However, in the case of Whole Foods, the use of sophisticated key lighting and high-end film may work against them. The problem lies in the fact that the TV-viewing public have become accustomed to this high-end trickery, and have learned to associate this type of imagery with luxury goods, equating to expensive goods. For a company that has a price perception problem, this type of advertising will only help to support the public viewpoint that Whole Foods is too expensive for them to shop for their groceries.
Time will tell if the national ad campaign is a success for Whole Foods Markets. They have grown their brand without marketing in the past, but it has come back to bite the company. With all of the competition for heath food stores, it is important for Whole Foods to push their brand to those that are not actively coming to the store to increase brand loyalty and repeat business.