If you are like most people, you have passed by a Whole Foods Market, stopped into a Whole Foods Market, and heard the joke about Whole Paycheck, but you’ve never seen an advertisement for Whole Foods Market. That’s because, as an organization that hates marketing so much it should probably just drop “Market” from its eponymous name, it is one of the only consumer product companies in the Fortune 500 that has never run national ads. Until this week, when it launched a $15-$20 million campaign with TV ads and a two-page spread in national newspapers.
The campaign is a direct result of Whole Foods’ awful performance on Wall Street in 2014, which has dragged down most other natural foods stocks, too. Although iconic, brilliantly run, highly profitable, dividend-paying, and still expanding fast, Whole Foods saw its same-store, year-over-year sales growth slide and missed its earnings targets for three quarters. This was finally rewarded by investors with a 19% plunge in the stock price on May 7. WFM was the single worst performing stock in all of the S&P 500 in May, and its 34% year-to-date drop is enough to make the kombucha start bubbling back up from the gut.
How to rectify the problem, or at least win back some of the Wall Street analysts? How about the company’s first-ever national ad campaign, all united by the tagline: Values Matter.
But wait a second. Hasn’t the burbling triple-bottom-line revolution that has been setting off our social seismographs for the past decade represented sort of an anti-advertising way of acknowledging that values matter? Isn’t it possible that the moment you start spending $20 million on slick ads trumpeting the fact that your values matter, suddenly they don’t? Aren’t you spending a lot of money to say that money isn’t all that important?
Perhaps. Still, as a shareholder of Whole Foods–and of rival Sprouts Farmers Market, which has also seen its stock pummeled by the decline of the market leader–I welcome the idea of spending on advertising if it will get more people into the store to appreciate all that is good about Whole Foods (which, unfortunately, these ads won’t). Granted, I have a rather jaded perspective on this issue, kind of like someone who walks away from a marriage only to see the other partner thrive.
As the first ever national head-of-marketing for Whole Foods, back in the late ’90s, I fought and lost a battle to make marketing relevant. Back then, the company treated marketing as purely optional, a “nice-to-have,” kind of like an in-store wine-chiller or a grind-your-own peanut butter machine: it might bring in a few more customers. To the extent it had a marketing strategy at all, it was the “Field of Dreams” approach: build it and they will come. But the problem in retail marketing in general is that while “build it and they will come” may sometimes work, “build it and they will come back” never does. With so much attrition and competition, you have to keep pushing the brand to generate loyal, repeat business.
So I tried to launch targeted direct mail programs, radio campaigns, print campaigns, a glossy magazine, a sophisticated loyalty program, a co-branded credit card–all were greeted with suspicion and rigorous tests for proof of concept, and were ultimately rejected. I spent more time marketing the idea of marketing within Whole Foods than marketing Whole Foods outside of Whole Foods.
Co-founder and then-lone-CEO John Mackey, one of the smartest and most visionary people I have ever met, had little appetite for marketing tests. As I documented in my 2014 book about the history of the natural foods industry, Natural Prophets, Mackey greeted appeals from his Regional Presidents who wanted to run advertising campaigns with a requirement that they bet their bonuses that the campaigns would work.
And in his 1999 strategic plan, Mackey railed:
Ongoing media advertising doesn’t work and is a waste of money . . . . Look at our industry. The companies that spent a lot of money on media advertising all ran into huge G&A problems; the only survivors have been those who have relied on the ‘radical’ idea of community-based marketing. There are simply no examples of large media advertising spending ever being able to increase sales of any non-startup or non-repositioned store on a sustained basis! Our company has wasted millions of dollars in ambitious advertising programs, which simply haven’t worked over the long term and never will.
So watching Whole Foods finally fork out the big bucks to Madison Avenue was bittersweet for me (albeit, it is using an agency so hip it flipped its name backwards to become Partners & Spade, and it isn’t even located on Madison Avenue). Hurrah for the cavalry; wish you had arrived sooner.
The TV ads rolled out thus far are beautiful. They feature Steadicam shots of orange pickers climbing ladders; day boats crashing through the waves; happy cows on their way to pasture. “Anthemic,” the Times called them (though with lines like “We are hungrier for better than we ever realized,” perhaps “anemic” would be more accurate). The first print ad, which broke on Wednesday, features a full-page picture of a woman of indeterminate ethnicity with a young boy on her shoulders (a migrant farm worker? a mother who wants the world to survive long enough for her son?), underneath the words “Values Matter.” There is no food in the print ad, no picture of a store, and the word “food” appears exactly twice in the text on the accompanying page, conjuring memories of the much-criticized campaign used by Infiniti to launch the Q45 sedan in the early ’90s, which showed haystacks and ponds, but no cars.
There are several inherent flaws in the Values Matter theme, and in the strategy that informs it, that may imperil the campaign.
Advertisers like to flatter themselves by creating gorgeous art–shooting in film or film-like 24P video, for instance, or using sophisticated key lighting to make it look like it’s always the break of dawn. The problem is, the TV-viewing public is accustomed to these tricks, which therefore only now signal one ineffable leitmotif: “expensive.” It’s the same mistake made by the upscale supermarket chain The Fresh Market, which immediately greets visitors with spotlighting, wood fixtures and Vivaldi, and makes them instinctively clutch for their wallets before they even reach the dairy section.
And unfortunately, that is the one message that Whole Foods cannot send. So many of its woes are due to its price perception, the one that earned it the “Whole Paycheck” moniker that simply won’t go away. No matter what the voice-overs on these commercials say, the Ingmar Bergman look of the ads will reinforce the perception that much of America already has about Whole Foods, something best summarized by the cartoon prophet Marge Simpson: “We can’t afford to shop at a store that has a philosophy.” The agency should have opted for a less formal, less expensive look, such as illustration or animation.
Values Matter? I might have used that theme back in 1999 had Mackey opened up his checkbook. Back then, almost no one sold the products that Whole Foods did, and there was plenty of reason to be suspicious about the motives and values of both conventional food producers and retailers. But times have changed, and now I am afraid Values Matter is off-key and insufficient.
The implication, of course, is that “values”–how food was produced, how much good stewardship its growers and purveyors showed toward animals, farmworkers, soil, and Planet Earth itself–are just as important, perhaps more so, than value–the price that we pay.
It’s a familiar theme to anyone who has ever marketed natural foods. Indeed, you can find variations of the line “values matter as much as value” in marketing efforts for natural foods companies dating back to the 1970s, and even in my book this year.
Values absolutely do matter to legions of young people, to those who are starting to understand the implications of climate change, to those who realize, as Stonyfield Farm CEO Gary Hirshberg put it, that “business … got us into this mess, and is the only force strong enough to get us out.”
The problem is, Whole Foods is no longer the sole keeper of those values. Natural and organic foods are available everywhere. At Walmart, at Kroger, even at the gas station convenience store. The same brands, same products, and same values. The only difference is the price, which is usually more at Whole Foods. Consumers no longer need to care too much about the values of the middleman who is selling them the food, so long as they feel good about the people who are actually growing it or producing it.
And what about those producers? Are the values of which Whole Foods rhapsodizes limited to the local farmers who gratuitously agreed to wear Whole Foods hats in the TV spots? Lots of the big CPG brands, like Frito-Lay, have “seen the light” and started to produce natural foods. General Mills even made Cheerios GMO-free, clearing the way for their sale at Whole Foods. Moreover, most of the core natural and organic foods brands–from Kashi to Honest Tea to Annie’s–are now owned by Big Food. So to say that “values matter,” and to imply that we should all care about the mood behind the food, is simply to invite people to buy lots of different products pretty much anywhere they want.
A more effective message would have been to tell viewers about some of the things that Whole Foods does better than everyone else, and in so doing to show them that values and value (price and quality) go hand-in-hand. In my view, Partners & Spade should have focused on the things that make Whole Foods unique, which combine to create the other half of the value equation: quality. For example, no one sources or handles produce better than Whole Foods. No other supermarket chain has a system decentralized and flexible enough to enable different regions–even different stores–to buy small lots of locally produced food. The company gets many exclusive products, and has single-handedly reinvented the notion of prepared foods, to the extent that many Whole Foods stores have become destinations for lunch and dinner. And, surprisingly, there are actually many good deals and good prices to be found at Whole Foods if one is selective. But the consumers seeing the Whole Foods ads will never know all that.
Nowadays the price that we pay matters, a whole heck of a lot. How else to explain the success of Sprouts, a somewhat bland and distant also-ran in the world of natural foods retailing, that because of its focus on prices has nevertheless expanded to 200 stores and made its management and owners fabulously wealthy with a 2013 IPO (even though individual investors have suffered through a devastating 39% loss in the last 12 months)? Or Kroger, whose stock has soared in the past year in large part because of its fastest growing department–natural foods–and prices that are, on average for a full market basket, 10-15% below even Sprouts?
For Whole Foods to roll out the glamor shots of cows in pasture is in some ways to continue to be tone deaf to this permanent shift in the attitudes of U.S. consumers.
A TV campaign that ran split 15s (two 15-second commercials separated by someone else’s 30-second commercial), one of which focused on Values Matter and the other on Value Matters, might have been more appropriate.
Only about 5% of all money spent on food in this country is for natural and organic. For 30-odd years, that 5% was more than sufficient to build Whole Foods into a powerhouse company, one that became the eigth largest publicly traded food and drug company in the U.S., and reached #232 on the Fortune 500 list.
Those 5% of customers are already buying the “right” foods, but because of Whole Foods’ price reputation (deserved or undeserved) some portion of them have defected to the conventional supermarkets–and that’s been enough to cause Whole Foods to miss its earnings targets and to see its same-store, year-over-year growth level off.
But these ads don’t focus on those people. Instead, the ads seem to be speaking to everyone else, the 95%, the ones who aren’t shopping at Whole Foods but whose dawning health or environmental consciousness is slowly steering them toward better foods and triple-bottom line-companies. That is okay, but it is a long-term play: that crowd is only interested in values as long as the value is there first. Targeting those people is unlikely to quell the angry traders on Wall Street or the impatient co-founder who most certainly agreed to undertake this campaign with gritted teeth.
By comparison, Sprouts is not as good a store as Whole Foods: It was late to organic produce, doesn’t offer much in the way of prepared foods, and has no strict standards to govern what it will and won’t sell. But it at least made the right call in targeting customers. It cedes the 5% to Whole Foods, but through its high-low pricing games and willingness to charge lower prices and accept lower margins, has succeeded in stealing enough of the 95% away from conventional stores to make for a very profitable alternative business.
Advertising is of course an inexact science, if it’s a science at all. There is a case to be made that, after not having advertised for so long, any noise at all from Whole Foods will generate some new business. Those of us in the natural foods business hope so. But as everyone in the ad business knows, patience and consistency are required. And for the company with “Market” in its name but no marketing in its DNA, those are likely to be in short supply.