Whole Foods has been testing a loyalty program for about two years now, and only recently announced its intention to roll it out nationwide.
The Whole Foods Market Rewards program is currently being tested in 11 locations in the Philadelphia area, where it was first introduced in 2014, and it has recently expanded to 12 locations near Dallas, with a 13th being added soon. If it proves to be successful, the company could roll it out nationally by next year.
This loyalty program is linked to the Whole Foods Market smartphone application, which already offers customers digital coupons whether they’re a rewards program member or not. Those who do sign up for the program get 10% off their first purchase and a one-time discount of 15% in a single department. Members are rewarded based on how much they shop at Whole Foods, and every once in a while they will receive “surprise” rewards.
Whole Foods already offers a rewards program at its new 365 stores, of which there are only two at this point, though a spokesperson for the company told Fortune that the two programs are separate.
Whole Foods‘ co-CEOs have repeatedly mentioned that the company would make efforts to reduce prices at stores, likely as a direct result of a “tectonic shift” in the food industry, which Walter Robb spoke about during the Fortune Brainstorm E conference last year. Consumers are becoming increasingly concerned about transparency and sustainability, forcing more inexpensive stores to offer products similar to those found at Whole Foods. Unfortunately for “America’s healthiest grocery store,” they’re offering them at lower prices.
Whole Foods is attempting to keep up with its competitors with its 365 stores, a cheaper alternative to the original. Even so, Goldman Sachs doesn’t have much faith in the company turning itself around. The bank downgraded Whole Foods to a “Sell” last week, the day before it announced its rewards program. Goldman Sachs said that the company is “losing share in its core natural and organic business” to the likes of Costco, Kroger, and online retailers. Consumers looking for healthy, whole foods don’t necessarily have to pay Whole Foods prices to get them.
Whether or not the rewards program will actually help the retailer is uncertain. People who are willing to drop $35 for an emu egg from Whole Foods likely don’t need the 10% off. Additionally, according to a price comparison from All Natural Savings, comparable items that can be found at Costco would still be more expensive at Whole Foods, even with the discount.EDIT POST