Whole Foods is facing its worst nightmare after an unexpected threat stole millions of customers (WFM)

pulse

March 27, 2017 4:10 PM

Whole Foods has lost as many as 14 million customers in the last six quarters.

Whole Foods

Whole Foods is losing millions of customers to what was once an unthinkable threat: Kroger.

The organic-food chain has lost as many as 14 million customers in the last six quarters, according to Barclays analyst Karen Short.

Most of those customers are instead going to Kroger, and probably won't ever go back to Whole Foods, Short said in a recent research note.

"The magnitude of the traffic declines... is staggering," Short said. "As most retailers know — once traffic has been lost, those patterns rarely reverse."

Kroger — a conventional grocer not known for organic offerings — has not historically been regarded as a significant threat to Whole Foods.

Kroger now devotes several aisles in its stores to organic and natural foods and offers a wide array of organic meat and fresh produce, as well. The chain also has its own line of organic goods under the "Simple Truth" brand.

The expansion into organics has paid off.

Kroger's sales of organic and natural food totalled $16 billion in the last year, compared to $15.8 billion at Whole Foods, according to Barclays.

Whole Foods' same-store sales fell 2.4% in 2016. That metric is expected to fall another 2.5% this year. Meanwhile, Kroger's same-store sales grew 1% in 2016.

Whole Foods CEO John Mackey recently acknowledged the growing threat from conventional grocers, without specifically naming Kroger.

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