business news in context, analysis with attitude

Interesting piece in the Austin American-Statesman about how companies like Whole Foods are coping with the economic downturn taking place in the US – offering coupons, stressing deals, and doing its best to shed its image as being almost prohibitively expensive. All of these efforts, according to financial analysts, are critical if Whole Foods – and other upscale retailers such as Starbucks – are to stay viable during a time when more and more people are cutting back on their expenses.

However, the American-Statesman writes, “marketing experts say companies such as Whole Foods and Starbucks should tread carefully lest they undermine their carefully built reputations for quality, consistency and a superior experience for customers, who have been willing to pay more for those benefits. ‘They are in a tough spot,’ said John Moore, a former Whole Foods marketing official who now runs an Austin consulting firm. ‘If they go down this lower price path, when the economy turns stronger, they are going to have a hard time regaining the pricing power they once had’.”

KC's View:
If it is to be a battle between marketing guys and financial analysts, and I have to listen to one of them as I develop strategies to save my business, I’m going with the marketing guys. (We all know how well the financial community has been doing the last few weeks …)

Moore is right. Companies like Whole Foods and Starbucks have to be careful. The key is not abandon the values that lie at the core of their offerings…while strengthening the value proposition offered to shoppers. It is a tricky balancing act…but this business has never been for the faint of heart.