« Back to home

The Whole Foods Strategy: The More Educated The Better

Posted on

While most grocery chains optimize store locations based on population density, mean household income (HHI), price per square foot, etc., Whole Foods prioritizes education over many of the standard criteria; it’s even in the top 3 store location criteria on their website.)

This makes sense, right? If I’m a “smart” shopper, I might place more emphasis on quality of goods and be prepared to spend more money for quality. But let’s also be honest; if I’m a poor college student or living on an academic’s salary, I also need to make budget-conscious decisions which might mean shopping at the mainstream grocery chain. So...is “educated” just a codeword for “wealthy,” or does Whole Foods really prioritize education over household income? We looked to our data to understand the spending behavior of these educated shoppers how it compares to mainstream grocery shopping.

It turns out that Whole Foods shoppers are pretty educated. While over 60% of our Whole Foods panelists have a bachelor’s degree or higher, at Kroger, the largest grocery chain in the US, only 43% do. Interestingly though, the income gap is much smaller: 38% of Whole Foods shoppers have a HHI over $75k compared to 30% at Kroger. While Whole Foods shoppers have a similar HHI to Kroger shoppers, they are making the decision to purchase their groceries at a higher price point. Maybe the “Whole Paycheck” moniker is actually true?

This is a powerful reminder of the importance of knowing your target demographic. By targeting educated (though not wealthier) customers, Whole Foods seems to be able to sell products at a higher price point to a specific subset of that group.

Behind The Data: We first segmented panelists by education level and household income across hundreds of thousands of grocery transactions. We then focused on transactions from Whole Foods and Kroger for comparison.

Learn more about consumer spending analytics with TXN.

Comments