Whole Foods didn’t get the moniker “Whole Paycheck” by accident. But for those who aren’t loyal shoppers, it’s not uncommon to wonder why is Whole Foods more expensive?
Here’s what I know having worked for them for 20 years:
Whole Foods costs between 10% to 20% more than typical grocery stores. That increase is due to higher quality ingredients in the products, but you also are paying for beautiful decor, improved customer service, and better product knowledge.
But that only scratches the surface of what makes Whole Foods different, and yes, sometimes more expensive.
So in this article, we’re diving deep into Whole Foods Market. We’ll explore their pricing and why you might want to shop there despite some higher prices. But we’ll also look at just how much prices have gone down since Amazon bought them in 2017.
Want to learn more about what makes Whole Foods special?
Just keep reading!
All this for $10 at the farmers market. But please tell me again how eating healthy is expensive. And before you say it, I don’t live in a big city, we don’t have a Whole Foods or anything special like that, I’m not rich. I also feed a family. Not just myself. Proceed. pic.twitter.com/slh9DjT1fT
— Play Wit Ya Mammy (@twowonfoe) September 2, 2018
How much does Whole Foods cost?
There have been several studies over the years showing that Whole Foods prices are an average of 10% to 20% higher than competitors. However, after the acquisition by Amazon, Whole Foods Market is now about 10-13% higher than other grocery chains.
But before I dive in further, it’s important to realize that since Amazon bought Whole Foods Market in 2017, there have been several actions taken by the company that has lowered prices, significantly in some cases.
I’ll get into that further below.
In fact, a 2015 MarketWatch article showed that prices are substantially higher across the board and they routinely overcharged customers.
Their prices were so high at the time, that they were fined $800,000 for deliberately overcharging customers.
The article compared consumer staples like bananas and peanut butter.
Bananas at Whole Foods cost an average of $0.99 per pound. This is anywhere from $0.20 to $0.30 more expensive compared to competitors like Target and Trader Joe’s.
The house brand peanut butter costs almost twice as much at Whole Foods compared to Safeway. $2.79 at Whole Foods versus $1.79 at Safeway for a 16 oz. jar.
Accusations of overpricing
In June 2015, Whole Foods was accused of serious overpricing when the New York City Department of Consumer Affairs launched an investigation.
The commissioner described the situation as “the worst case of mislabeling” the inspectors had ever seen.
One part of the investigation assessed 80 different prepackaged products. Each item was weighed, and in every instance, the label on the package was inaccurate. In fact, 89% of the packages deviated so much from the actual weight that it violated federal regulations.
On top of this, Whole Foods had already been fined for things like charging tax on nontaxable items and having inaccurate checkout scanners.
But having worked for Whole Foods for more than 20 years, I can tell you that poorly calibrated scales or a data input person, applying the wrong tax code to an item are rare occasions, and certainly not deliberate.
I can also tell you those things probably happen in every store across the globe.
Currently, Whole Foods has more competition when it comes to the sale of organic and natural foods. Nearly every grocery chain has increased its organic offerings, including Walmart, Target, and Kroger.
This offering of a wider selection of organic produce, along with their lower prices has forced Whole Foods to rethink its pricing.
On average, their prices have dropped 2.5% since last year. (source)
https://t.co/IEaJD2Orts Today, I’m sharing a $56 Whole Foods haul! Also, why is food so expensive at Whole Foods?? We hadn’t been there in a while and it hasn’t changed from when we used to shop there regularly. Sadly, because our kids have gotten older and eat a lot more, we c… pic.twitter.com/tqGGsUWlw2
— Sandra Calixto (@thesensiblemom) January 17, 2019
Is Whole Foods more expensive than Walmart, Trader Joes or Sprouts?
Whole Foods Market is more expensive compared to Walmart. But they do tend to be cheaper than Sprouts, and comparable to Trader Joes.
But, a study conducted by Bank of America Merrill concluded that Whole Foods is still the most expensive grocery chain in America. (source)
While Whole Foods did reduce the price of produce significantly, they did not reduce prices for the center of the store items. Items like pre-packaged foods, canned goods, and other cooking ingredients cost over 50% more than similar items found at Walmart.
Notice I said similar there.
We’re not talking about the exact same items at both stores. Since Whole Foods Market doesn’t allow artificial colors, flavors, preservatives, or growth hormones, that can make some products cost more.
But many feel that a slight increase is worth it.
Walmart was generally deemed the cheapest grocery store to shop at. They did not include stores like Aldi in their assessment.
I did read a Business Insider article where a shopper visited stores in Oakland, California to compare prices.
He discovered that Whole Foods actually had lower prices than Sprouts. Particularly on staples like peanut butter, produce, and dish soap.
Trader Joe’s has a slightly different business model than Whole Foods.
They do claim that all of their store-branded items are free of artificial flavors, preservatives, and synthetic colors. They also do not contain GMOs. Whole Foods private label products are also guaranteed to be that way too.
However, Trader Joe’s buys directly from their suppliers for the lowest possible price.
They purchase in large volume and switch out products on a fairly regular basis. If an item does not sell as quickly as they want, they switch out the item for something else.
Because of that, while you can get great deals at TJs, it’s hard to do all your shopping there. So for many, they are willing to pay a few pennies more at Whole Foods for a more complete shopping experience.
Also, Trader Joe’s doesn’t run sales or accept coupons and most of the products on their shelves are private-label brands.
Wow: “Ordering #grocery delivery from @WholeFoods using @Amazon Prime Now may be cheaper than buying from @Kroger using @Instacart.” – @barclays https://t.co/lEP2Qslr39 @WeAreManthan #ecommerce #shopping pic.twitter.com/15eRjvCoWL
— SAP Consumer Products (@SAPConsumer) March 29, 2018
Is Whole Foods cheaper with Amazon Prime?
Yes. With the acquisition of Whole Foods, Amazon introduced discounts for Amazon Prime members. Amazon Prime members get an extra 10% off on sale prices. They also have weekly specials targeted towards Amazon Prime members. And in some cities, they offer free delivery from Whole Foods within 2 hours.
Check out Amazon Prime if you don’t have it yet. You’ll not only save at Whole Foods, but you’ll get world-class streaming TV too!
Just CLICK HERE to check it out on Amazon’s website.
The Prime discount even applies to all of its Whole Foods Market 365 stores.
If you don’t already have a Prime membership, it may be worth looking into.
At $119 per year, you get access to:
- Free two-day shipping
- Amazon Prime streaming video and music services
- Delivery services like Prime Now in certain cities.
- Unlimited photo storage on a Kindle or Fire device
These services, along with the Whole Foods discount, are a great value for the price.
That illusion is that healthy, farm-direct foods are extremely expensive and so we should pay much, much, more. This idea was started and propagated by companies like “Whole Foods”, but has been capitalized https://t.co/aF9sK9V0JS #FortisFitness #EcoDiet pic.twitter.com/eEpb6yZMig
— Fortis Equipment (@FortisEquipment) June 19, 2018
Is Whole Foods cheaper now that Amazon bought it?
Yes. To overcome their “whole paycheck” reputation, Amazon announced they were cutting prices at Whole Foods an average of 20% in 2019.
Prices were lowered on peak-of-season produce, including greens, tomato, and mangoes.
Amazon had already cut prices on several products immediately after the acquisition of Whole Foods. Prices were cut on eggs, fish and produce. Just a few days after the acquisition, there were major noticeable differences in the price of apples, bananas, salmon, and beef.
However, they didn’t cut prices across the board.
And in fact, prices were raised several months before prices were dropped. While the higher prices affected things like ice cream, soap, and cookies, dropping prices on things like produce really just put them back to where they were before they raised prices.
So some things may be cheaper, but other things are more expensive. Competitors still have cheaper prices, generally, compared to Whole Foods.
But for those who want to shop with a glass of wine dancing to the beat of the latest Billie Eilish track, hitting every free sample tray along the way, there’s just no comparison.
— Reuters Business (@ReutersBiz) April 1, 2019
What is Whole Foods pricing strategy?
Whole Foods Market, like Starbucks, charges more for their products because they understand their customers are willing to pay for the atmosphere and ambiance and improved customer service. Most grocery stores have very slim profit margins and usually only make a profit by sacrificing customer service or price.
But let’s explore that last sentence in greater detail.
A smaller specialty store may have less inventory but sells it at higher prices and has more employees to provide a better customer experience with free samples and tastings.
Whereas a more conventional store is larger, with more inventory at lower prices, but customer service is a bare minimum.
These stores usually have fewer employees and fewer specialty departments. Right now, you should be thinking of Walmart with its excessively long lines and the inability to find help when you need it.
I wrote this recent article where I talk about all things profit margin related. There I talk about what profit margins actually are, and why they are so low.
Just click that link to read it on my site.
Whole Foods’ pricing comes from its desire to nourish people and take care of the planet. They believe that there is no place for ingredients like artificial sweeteners or high-fructose corn syrup in the food people eat.
They also have very stringent standards when it comes to animal welfare, environmental impact, and the products it sells to consumers.
Shopping at Whole Foods isn’t just grocery shopping. It’s an experience. One where people are willing and able to pay more for organic, natural foods.
Whole Foods has also strategically placed stores in affluent neighborhoods. This, along with their mission to sell high-quality foods, allows them to charge higher prices.
— Jessica Marmor Shaw (@jessmarmor) April 24, 2016
What makes the products at Whole Foods better or different?
Whole Foods is known for selling organically grown and all-natural products. They have a long list of banned ingredients such that customers feel comfortable not having to check labels for artificial ingredients and preservatives.
But these days, unlike when Whole Foods started, you can find quality all-natural and organic items everywhere.
So why pay more? Let’s examine what sets Whole Foods apart in greater detail.
1. Quality Ingredient Standards
There are a lot of reasons people pay more to shop at Whole Foods Market. But not the least of those reasons is being able to shop without having to read the labels to look for bad ingredients.
Whole Foods has a long list of quality standards and banned ingredients. Many people, my family included, appreciate being able to have a higher level of trust with the products on their shelves.
These banned ingredients include, but are not limited to:
- Hydrogenated fats
- High-fructose corn syrup
- Artificial sweeteners, colors, or flavors
If a food contains any of these unacceptable ingredients, you won’t see it on its shelves.
But there’s a lot more to know about Whole Foods Market and what makes them different or special. You can read more about why Whole Foods is so popular in this recent article. What really surprised me was how much has changed since Jeff Bezos and Amazon bought the company.
Just click that link to read it on my site.
2. Better Meat and Dairy standards
Beyond ingredient standards for all the canned and boxed goods, Whole Foods also has strict standards not only for additives and hormones added to meat and dairy but also how the animals are treated.
They created a 5-step animal welfare rating system that they apply to all ranches and farmers they work with.
Some of these standards include things you would expect to see, such as:
- No added growth hormones
- Never any antibiotics used
- No animal by-products in feed
But they also have requirements that cattle, sheep, and goats must spend at least two-thirds of their life on the pasture.
All of the meat sold in the meat department, except kosher turkey, is certified to meet animal welfare standards set by the Global Animal Partnership.
Again, if the care of livestock doesn’t meet their standards, Whole Foods won’t sell the meat in their stores.
3. Better environmental standards
Whole Foods cares about the environment, too.
They stopped using plastic grocery sacks in 2008, long before being eco-friendly was hip. But even beyond that, I recall swapping our trash compactor for a compost compactor way back in 2002.
These days, virtually all Whole Foods stores recycle or compost far more than they send to the landfill.
But the cleaning products they sell are eco-friendly too.
Of course, as you’d expect, they don’t sell anything tested on animals. But beyond that, they developed an “Eco-Scale” for cleaning products.
This scale, overseen by a neutral 3rd party, ranks products based on:
- Environmental impact
- Ingredients (formaldehyde, phosphates, etc)
- Animal testing
Products are given a rating of green, yellow, orange or red. Whole Foods does not sell any products that fall in the red on the scale.
— Yahoo Finance (@YahooFinance) May 11, 2015
Is Whole Foods the most expensive grocery store?
Yes. Even with Amazon’s recent price drops and Amazon Prime discounts, Whole Foods is considered America’s most expensive grocery chain.
( source )
If you’re from the southeast, this may surprise you, as Publix is known for its high prices as well. But don’t be too surprised. They are very close in price to Whole Foods.
However, Publix does have great sales and is constantly running buy one get one (BOGO) free sales.
If you’re wondering how grocery stores pick which items go on sale, check out this recent article on my blog. There I go over why grocery stores have sales and how items are picked for sale prices. But you might be surprised at the science behind sales and how you are likely to actually spend more despite the discounts.
Just click that link to read it on my site.
A study done by Bank of America Merrill Lynch examined 10 studies from 8 different areas over a year. They analyzed prices at several chains, including:
- Whole Foods
This study found that Whole Foods had the highest prices overall. Although Sprouts is more expensive in many areas.
However, even with these higher prices, Whole Foods has gained an almost cult-like following. They started out a small health food grocery store to make natural, organic food easily accessible.
They’ve mostly stuck by these roots, and have set very high standards for products they sell.
To read more about the history of Whole Foods, and to understand more about why the chain is so popular, head over to this recent article.
Just click that link to read it on my site.
Did I answer all of your questions about why Whole Foods is more expensive?
In this article, we took an in-depth look at why Whole Foods is so expensive.
We examined how they price their products, talked about past scandals regarding overpricing. But we also explored how Amazon’s acquisition of Whole Foods is leading to lower prices across the board.
We also took a look at what makes products, including produce and meat, better.
Ultimately we answered the question of why Whole Foods is more expensive.
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