An ailing economy tends to change consumers' buying patterns and early signs surfaced in the restaurant sector as fewer people headed out to eat. Premium food products, including natural and organic products, were another likely candidate to feel the pinch. NBC Nightly News man-on-the-street type interviews earlier this summer suggested that shoppers my push their grocery charts down some different isles.
Last week, the king of natural and organic groceries, Whole Foods Market, reported that its third-quarter net income dropped more than 30 percent. Some of that is due to the fact that the company has purchased its competitor-- Wild Oats. However, officials also pointed to a tough economy that's shifted consumer spending.
Whole Foods stock shares dropped 15 percent on the third-quarter report and the company's reduced outlook for 2009.
Whole Foods earned $33.9 million for the three months ending July 6, but that's down from $49.1 million for the same quarter last year. The Wild Oats purchase accounts for about a $4.9-million impact on the company's net income. Whole Foods officials also have slashed their optimistic outlook for 2009. They had predicted 25 percent to 30 percent growth, but now say it's more likely to be 6 percent to 10 percent for the year. There will be fewer new store openings as well. The company had planned to open 21 new stores in 2009, but has cut that to 15.
While this in no way signals an end to natural or organic food products, or the retailers who bring them to the marketplace. There are many committed shoppers for such products. It does, however, suggest that consumers may be more selective -- spending their dollars on natural and organic foods that they believe offer the best pay back. They also will look for more bargains and head to retailers that offer better pricing on such products. Finally, it illustrates how consumers shift their choices when there's less "disposable income" to go around.