Whole Foods just released stellar quarterly results, with net income rising 32%, which probably had some people scratching their heads, as it was yet another conflicting signal that did not compute with a potential economic downturn.
In the question and answer session with analysts after the results, the question was asked about which demographic group was driving the growth?
Here’s the CEO John Mackey’s response:
“Karen, I don’t think — I think we’d rather position that as we’re not lagging with Gen X so much as that we’re doing very, very well with boomers and Millennials. So I mean, we have plenty of Gen X customers, but we seem to do better with boomers and Millennials. And we don’t exactly know why that is. We can speculate on it somewhat that the Millennials, a lot of them grew up eating Whole Foods because their parents began it. So they’re already familiar with natural organic food. So it’s not as big a transition for them. I think the whole purpose-driven aspects of Whole Foods Market has a strong appeal to the millennial generation. And the boomers, I mean, I think the thing that’s driving them to convert is they’re aging. And they’d like to stay young and healthy and vital and extend their longevity, so that’s a natural push for them. And then I just think the Millennials line up well with our philosophy and our purpose-driven aspects for our company. But the X-ers may be just a little bit tougher sell. And hey, the X-ers are younger than the boomers, but I don’t think they’ve been able to repeal the aging process. So we think as they age as well, they will begin to turn more to Whole Foods as well. So we’re bullish on all 3 demographic groups.”
The rationale given seems to make sense- aging Boomers are looking after the health and trying to eat better to avoid excessive healthcare costs and Millennials are just smarter and more informed and are more consumed with food culture.
For this group, food has been elevated in importance, it’s not fuel, it’s become conversation, entertainment and an important part of their lives.
While some observers might comment about the financial challenges Millennials face and would naturally jump to conclusions about their desire to find the cheapest food solutions.
This is clearly not the case, Whole Foods has succeeded because they have delivered strong messaging about value, but much more than that, they’ve created an experience around food and food shopping that elevates it in a way that appeals to the sensibilities of this generation.
If you’ve got to eat anyway, the marginal cost of increasing your standards and having a good shopping experience, means Whole Foods isn’t really that prohibitive.
Food brands targeting Millennials should take note because they appear to be the first young generation of American to take food seriously and are demanding a cut above the standard issue, both in terms of quality and experience.