Whole Foods is crashing after reporting disappointing earnings.
The brand, which is known for reinventing grocery stores, has struggled recently as customers seek out cheaper options.
Meanwhile, grocery chain Kroger has reported positive comparable-store sales for 45 straight quarters.
Kroger is also expected to surpass Whole Foods Market within two years and become the nation’s top seller of organic and natural food, according to a recent report by JPMorgan Chase.
Here are a few reasons Kroger is killing Whole Foods.
1. Customer service and loyalty.
The chain is renowned for excellent its customer service and loyalty program, Stephen Ward, commercial director of the research and consulting firm Conlumino, said in a note to clients.
While Kroger has had a loyalty program for more than a decade, Whole Foods has been slow in developing one. The brand just started testing its “Market Rewards” program in September.
2. Private label products.
Much like Costco and Aldi, Kroger mainly offers private-label products, keeping prices low.
The retailer’s “strategy of offering more specialty and organic food is helping it overtake other chains despite an industry-wide trend away from supermarkets,” JPMorgan analysts write.
Meanwhile, Whole Foods has struggled to shed its expensive image. Some customers even call it “Whole Paycheck.”
3. Organic selections.
Selling more organic food will attract high-end customers and help drive profits at Kroger, according to JPMorgan.
Kroger, which has more than 2,000 locations, could also take potential customers from Whole Foods because they perceive the brand as a better value.
Whole Foods has 411 locations but continues to expand into new markets.
In addition to offering more organic food, Kroger is expanding into affluent markets in Baltimore and Washington, D.C.
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