Blog: Crisis Management

Grocer in a pickle after overcharging allegations surface once again

Late last month, Whole Foods found its integrity questioned on a national level after an audit of its New York stores by the NY Department of Consumer Affairs revealed rampant mislabeling throughout the store’s prepackaged foods, often resulting in customers paying more than they should have at the register. A combination of the chain’s already relatively high prices, along with the towering expectations of honesty and transparency it’s created among shoppers, resulted in negative outcry across both social and traditional media.

We expected a stellar response from Whole Foods, but instead we got a video from co-CEOs Walter Robb and John Mackey that left us with the kind of bad taste in our mouths usually associated with dipping into expired hummus:

Wooden delivery, awkward hand motions, poor excuses, a seeming difficulty with preventing smirks from creeping in and repeatedly pointing out that some errors were in favor of customers as well left us feeling no sympathy for Whole Foods. Fact is, just last year the grocer settled a case in California related to the same type of pricing problems, agreeing to pay nearly $800,000 and appoint “state coordinators” to keep tabs on pricing accuracy in that state. How, then, are we supposed to believe these errors are not only accidents, but also that Whole Foods is doing everything it can to keep things on the straight and narrow?  Perhaps more importantly, this was only an apology, not an amends – they didn’t “make things right” with consumers. They should have done something like knocking 20% off all weighed-in-store products for a month – they’d make it up in associated purchases in no time.

Competition in fresh and healthy foods is more intense than ever. While Whole Foods is sitting firmly at the top of that mountain, it doesn’t take much to send shoppers elsewhere, especially considering the market is already saddled with the moniker of “Whole Paycheck” by even the happiest of customers. Beyond the temporary discount, our advice would be to establish a transparent and effective pricing system that either eliminates errors or makes certain they are not in Whole Foods’ favor. Will it cut into the bottom line a bit? You bet. But, considering the main issue here is Whole Foods at least appearing to care a little too much about locking in profits, it’s the right move in terms of crisis management.