The grocery industry is undergoing massive change, according to a Whole Foods executive.
“It’s a tectonic shift that’s going on in the food marketplace right now. Absolutely tectonic,” Whole Foods co-CEO Walter Robb said Monday at a conference in Austin.
Rising demand for organic food and sustainably farmed products is driving the change, he said. Customers also want cheaper prices and a more convenient shopping experience.
Robb made the remarks the day after Whole Foods announced it would be firing 1,500 employees to save money.
“It’s part of an evolution of the company that we’re going through to free up some more money to invest in lower prices, marketing, and communication and technology upgrades,” Robb said of the firings.
Whole Foods has had a rough couple of months.
The company came under fire in June after a New York City government investigation revealed that several stores were overcharging customers for food.
City inspectors called it the “worst case of overcharging” they had ever seen, according to The Daily News. Customers threatened to boycott the grocery chain as a result. Whole Foods executives have said the overcharges were unintentional.
One month later, Whole Foods’ stock was hammered after the company reported disappointing sales and lowered its revenue outlook for 2015. The company’s shares have declined more than 35% this year.
Whole Foods is rolling out a new cheaper chain of stores called Whole Foods 365 to keep up with a rising tide of competitors. The company has said the stores will be specifically designed to appeal to millennials with “modern, streamlined design, innovative technology, and a curated selection” of organic and natural foods.
Whole Foods is hoping the stores crush growing competition in organics from traditional supermarkets like Kroger, as well as beat back discount grocers like Aldi and Lidl, which are both planning to expand in the US.
Aldi and Lidl have upended the UK grocery market over the past several years by sending the nation’s largest supermarkets into a crippling price war that has dented profits, triggered layoffs, and sent the companies’ share prices tumbling, The Wall Street Journal reports.
The CEO of Asda, the UK’s second-largest grocery chain, has called the new competitive environment created by Aldi and Lidl “the worst storm in retail history.”
Robb says Whole Foods will need to continue to evolve to take advantage of the rapidly changing grocery landscape.
“There’s plenty of business to go get, we’re just going to need to make that evolution to continue to go get it,” he said.
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