Expert Panel: Whole Foods Should Not Drop Its Prices

Seeking to shed its “Whole Paycheck” reputation, Whole Foods over the last few years has been offering more discounts, brought in less-expensive products, and held prices in a bid to appeal to a broader range of consumers. But Wall Street is wondering whether Whole Foods has already lowered prices enough.

Shares of Whole Foods slid $9.40 to $87.50 last Thursday after management, in reporting first-quarter results, warned that it expects profit margins for the next three quarters to decline compared to last year. The declines were attributed to particularly tough year-ago comparisons but also to continuing investments to improve its pricing message. Better appealing to price-conscious shoppers is said to be more critical as Whole Foods enters smaller, more suburban markets.

In its 2012 annual report, Whole Foods attributed much of its success in the past few years — including grocery market share gains and 11 consecutive quarters of comp growth of 7.8 percent of better — to “visible value efforts which have positively impacted our price image.”

To read the rest of the story, please go to: Forbes