Whole Foods Is Losing Millions Of Customers Over This

There is something that is driving millions of customers away from Whole Foods, the healthy organic-food chain. That something is called Kroger.

Kroger is a more conventional grocery store chain and is the second-largest general retailer behind Walmart and the twenty-third largest company in the United States.

Barclays analyst Karen Short said in a recent research note that Whole Foods has lost as many as 14 million customers in the last six quarters. As of December 2015, Kroger operates, either directly or through its subsidiaries, 2,778 supermarkets and multi-department stores.

According to Short, most of those customers are instead going to Kroger and probably won’t ever go back to Whole Foods.

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

Krogers has been expanding into organic foods and judging by how many Whole Foods customers have switched over, it seems to be paying off.

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

Whole Foods also saw same-store sales fall 2.4% last year.

“The more conventional mainstream supermarkets have upped their game. We’re going to do the best job that we can to keep our core customers from migrating back over to those guys,” remarked CEO of Whole Foods John Mackey in a call with analysts back in February.

Short however does not think that there is much Whole Foods can do.

“Whole Foods might face significant challenges to reverse behavioral changes even if execution improves because execution at competing retailers remains very strong,” Short said.

Disclaimer: We have no position in Whole Foods Market, Inc. (NASDAQ: WFM) and have not been compensated for this article.