The Lifestream of Jon Moss

Whole Foods' next niche?

November 12 2008, 10:03pm

Whole Foods once owned the "organic grocer" category, but no more. Health Magazine's list of healthiest grocery stores now includes traditional chains like Safeway and Publix.

The niche is gone. Organic has gone mainstream.

When that happens, pricing advantage dissipates, as do margins, as Whole Foods announced some ugly profit results last week, including taking a big cash infusion from an investor. With competitors hammering you on price and stealing your market growth, do you compete on their playing field of lower prices, or do you develop a new niche?

A new niche, of course. For Whole Foods, or a like-minded store, one opportunity is "special diets," including those related to food allergies.

It's not a small niche. Food allergies in children have risen 18% since 1997, affecting 3 million children today. Nearly 4% of adults, or 12 million people, have food allergies. Another 3 million people can't consume gluten (ceilac disease). In this niche you could include aging baby-boomers who focus on low-sodium, low-fat, dairy-free diets or people who adopt alternative diets like veganism.

Whole Foods has a breadth of products for special diets but based on my own recent diagnosed condition (candida overgrowth), I had no idea. I discovered by chance that my Whole Foods store has a staff nutritionist who'll freely help customers with special diet meal planning. Carly the nutritionist knew all about candida and helped me understand what I could eat and not eat, and pointed out myriad wheat-free, yeast-free and sugar-free products in the store. I so do not cook, but my Whole Foods has an expansive prepared food case. Every dish is meticulously labeled detailing its ingredients, pointing out clearly if it contains gluten or wheat.

A niche of people who prioritize their health, no matter the price, exists. Is that so much of a luxury?

UPDATE: The nutritionist at my Whole Foods Store (the flagship store at 5th and Lamar) is a pilot project. No other Whole Foods have such a program. Yet : )

Also I just discovered that the Jewel-Osco grocery chain just opened a "green store"  in Chicago that is eco-friendly in design and operation and features an on-site dietitian.