This research report pits Whole Foods against Trader Joe's. It details consumers' perceptions around the two grocers and the value proposition and how well they deliver on it. The report also takes a look at how consumers feel about the idea of Whole Foods new 365 stores.

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BRAND WARSGROCERY SHOWDOWN: TRADER JOE’S VS. WHOLE FOODS

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IT ALL STARTED 99 YEARS AGO...
…when the first modern grocery store—Piggly Wiggly—opened in Memphis, TN,1
and revolutionized how we shop for food by allowing customers to pick items off the
shelves themselves. And in the century that’s followed, the nature of grocery
shopping has expanded even more. In 1967, Trader Joe’s dressed up its value-
driven convenience store chain in Hawaiian shirts and entered the grocery game.2
Then, in 1980, Whole Foods opened in Austin, TX3 and forever changed people’s
ideas of what a natural foods store could be.
Now, as we approach the 100th anniversary of the grocery store, things are evolving
faster than ever, with grocery and meal delivery, specialty stores on every corner,
and even big box behemoths like Costco and Walmart peddling organic produce
and artisanal cheese.4

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“It’s a tectonic shift that’s going on
in the food marketplace right now.”
– Whole Foods Co-CEO Walter Robb
(Fortune)

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A TALE OF TWO STORES
With so much change underway we decided to take a closer look at two grocery
stores – Trader Joe’s and Whole Foods – that have differentiated themselves in the
grocery category. These two used to be on parallel trajectories, but are now
crossing paths more than ever. They’re increasingly pitted against each other in the
media – everything from exposés comparing the prices of products at each store,5
what living within close proximity of each does to the value of your home,6 and most
recently – whether the new 365 by Whole Foods Market is designed to directly
compete with Trader Joe’s.7 We asked consumers their perceptions of and
experiences at each grocer, as well as their initial reactions to 365 – read on to hear
what they said.

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SOMETHING FOR EVERYONE
Trader Joe’s is primarily viewed as a “hip” specialty grocery store that offers a
multitude of organic, healthy, and unique products. Consumers love the eclectic
items that they can find, noting that these aren’t items you could find on the shelf of
a big box store. Although the products are niche, consumers feel that there’s
something for everyone: wholesome snacks, international food, gluten-free items,
etc. Trader Joe’s delivers a great value, and wins consumer praise for the “family
friendly” price point – something that definitely sets it apart from Whole Foods. Only
a small portion feels that the grocer is overpriced and caters to particular, expensive
tastes.

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Trader Joe’s is more than a grocery store.
They sell extraordinary items and things you
wouldn’t really find at your local food store.
Therefore Trader Joe’s is an awesome
place to shop.
– Male, 18-34
Fun and different items I wouldn’t find
anywhere else. I enjoy the unique
atmosphere. Lots of great frozen goods and
healthy (or otherwise) unique snack items.
Bakery and deli have unique combinations.
I say Trader Joe’s corners the market on
adventuresome dining.
– Female, 55+

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BECAUSE COOKIE BUTTER
Or so we thought. While Trader Joe’s absolutely sets itself apart from the
competition with unique specialty items that can only be found in Trader Joe’s oasis
of ringing bells, Hawaiian shirts, chalkboard signs and, yes, cookie butter, the top
unique benefit identified is the healthy, organic food (28%). Consumers speak
generally to the “healthier,” “cleaner” options the store provides, but go on to explain
how they love the prepackaged goods, frozen food, and wine – not exactly the
hallmarks of a nutritious diet. Consumers feel that Trader Joe’s caters to their
lifestyles, whether by providing exciting prepackaged options to those too busy to
cook, accommodating those with dietary restrictions, or having a constantly-stocked
supply of “inexpensive yet drinkable” wines.

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I like that the products Trader Joe’s offers
are not in other markets. The frozen and
wine selection are my favorite. I feel they
are looking out for my health and would not
deceive me just to make a dollar.
– Female, 55+
A grocery store focused on healthy, usually
organic, staples with a fun selection of out
of the ordinary options. Stores are smaller
in size but carry everything you need for
your daily grocery shopping.
– Male, 18-34

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HIPSTER
Health conscious, upper class hipster nerds
GRANOLA
Annoying, tree-hugging, liberal granola-eaters
HIPSTER
Wannabe flower child
GRANOLA
A little extra money to spend, Californian
CRUNCHY
Rich, well-educated, crunchy
CRUNCHY
Crunchy granola people
ORGANIC
Health nuts that like to eat local,
organic, non-GMO foods
ORGANIC
Prefer to eat organic and are health conscious
HEALTH CONSCIOUS
Well educated, health conscious, and eco-friendly
HEALTH CONSCIOUS
Trendy, health conscious bargain hunters
EDUCATED
Wealthy and well educated
EDUCATED
Open-minded, educated, white,
range from middle to upper class
WHAT TYPE OF PERSON SHOPS AT
[WHOLE FOODS/TRADER JOE’S]?
While consumers use similar words to describe the grocers’ customers, the
meaning behind them is different – Trader Joe’s seems to have a more
authentic customer base whereas Whole Foods’ crew is more about status.

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Granola eating, earth loving, with extra
money to spend.
– Female, 35-54
Rich and sometimes a hippie, but still rich.
– Female, 18-34

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FOR [GRANOLA] LOVERS
The general consensus is that Trader Joe’s aisles are packed with foodies who are
savvy shoppers, balancing their preference for healthy, organic food with their
budget. While many describe Trader Joe’s shoppers as granola-eating hipsters,
they do so in a quirky, positive light. Consumers think that this wool-rocking, kale-
loving crew flocks to Trader Joe’s on the hunt for unique items, often due to dietary
restrictions such as vegetarianism or veganism. A much smaller group describes
Trader Joe’s patrons as rich “yuppies,” but for the most part, the Trader Joe’s
customer is a lovingly funky health nut looking for good food on a reasonable
budget.

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People looking for healthy options for a
modest price. I usually see the most
unusual people there: healthy, hippie, and
hungry. I see people usually 30+ years old.
People who like organic or have to avoid
certain allergens. Hippie/hipsters. People
who like cheap quality wine…
– Male, 18-34
Normal weight range for height, exerciser,
vegetarian, liberal, health nut, seeks natural
health, over 30, more laid back than most,
little or no makeup, kind, concerned, likes
animals, nature lover, down to earth,
hippies, special diets, doctors sent them,
wishes to change eating habits, wear flip
flops or Birkenstocks, loves salad bars,
doesn’t lie too much, outdoorsy, does not
hunt, has a bike, enjoys or enjoyed
camping, survivalist, seeks peace.
– Female, 55+

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COME FOR THE PRODUCE, STAY FOR
THE EGOTISTICAL YUPPIES
On the flipside, Whole Foods shoppers are painted in a much more negative light,
mostly due to their willingness to foot the “whole paycheck.” There’s no doubt that
Whole Foods shoppers’ priority is organic, local, Non-GMO foods. Yet their
willingness to shell out top dollar, sometimes unnecessarily, is seen as obnoxious
and makes shoppers come off as elitist, “egotistical yuppies.” Lastly, the Whole
Foods crowd contains a different breed of “granola hipster” than visits Trader Joe’s
– the people you bump elbows with at the Whole Foods hot bar are seen as
educated, pretentious, entitled “tree-huggers.”

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Someone who cares about where their food
comes from, what’s in it, and how it was
made. Most likely they prefer organic,
healthier options. Maybe even have special
diets that don’t have to do with allergies.
Cruelty free food would be a main concern
as well.
– Female, 18-34
Wealthy or upper middle class people who
can afford to maintain a healthy
diet/lifestyle. They can be snobs and
sometimes seem to think they are better
than others who don’t shop there.
– Female, 25-34

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WHOLE FOODS POCKETBOOK
Price plays a large part in the overall brand perception. Although consumers agree
that Whole Foods carries premium products, they’re not sold on the value of the
food they’re buying. While some are more even-keeled when describing the cost,
simply stating that the store is “a bit pricy,” others passionately describe the grocer
as “elitist” and “trendy,” some going so far to say that Whole Foods is for “yuppies
with their yuppie foods.” This is something that Whole Foods has certainly been
under the microscope for in 2015 (could we interest anyone in a $5.99 bottle of
asparagus water?).8

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Expensive organic food. Watch what
happens at the checkout counter. They’ve
been cited in NY and LA for ripping off their
customers.
– Male, 55+
Whole paycheck. Great selection of organic
foods but they tend to be pricey. They also
have a great hot plate bar. It’s very nice
inside and the prices definitely reflect that.
– Male, 18-34

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EVERYTHING FROM A TO Z
Price aside, consumers feel that Whole Foods is above par when it comes to
freshness and quality. They’re drawn to Whole Foods for much more nuanced
health reasons than those who visit Trader Joe’s. Consumers seek ethically-sourced
food that is non-GMO and free of pesticides and additives, including “grass-fed
meats and poultry,” “fresh organic juices,” products in a “natural state.” Furthermore,
Whole Foods provides exclusive products unavailable elsewhere as well as obscure
ingredients that expand culinary options for those with allergies or intolerances. This
expansive quality and superior selection motivates consumers to visit Whole Foods
even when the location isn’t particularly convenient.

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It is a godsend for those of us who have to
cook for someone with food allergies or
certain food ingredient intolerance. Not only
do they have hard to find things like gluten-
free items, but they have a wide variety that
offers customers a choice. I love that!
– Female, 55+
A store filled with local, organic, and fair
trade goods. Fresh produce, deli, health
and beauty. Eateries and bakeries. Beer
and wine. A natural and wholesome variety
of products.
– Male, 18-34

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LET’S TALK ABOUT HEALTH, BABY
Consumers appreciate both Whole Foods and Trader Joe’s because of their healthy
offerings. This makes perfect sense for Whole Foods, which lists selling “the highest
quality natural and organic products available”9 at the top of their list of core values.
But Trader Joe’s brand promise is much more about value, “We just focus on what
matters – great food + great prices = Value.”10 There’s no talk about organics or
even health.
Still, of the consumers that we asked, Trader Joe’s top benefit (28%) is its “healthy,”
“organic” offerings, even when mentioned in tandem with frozen and prepackaged
goods. Health is defined much differently – “healthier alternatives” at Trader Joe’s
versus food in its purest form at Whole Foods, but Trader Joe’s seems to have
enjoyed the benefits of the organics wave without actively pushing their efforts.

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They have a wider selection of organic
foods than my local grocery store, not to
mention that the quality of their produce is
far better. Fresh veggies and fruits are a
main staple in my family’s diet, I wish to
give them the best choices possible without
the questions of preservative and additives.
– Female, 18-34
Healthy, responsible, convenient food
options at affordable prices…The food is
slightly healthier than typical grocery stores
but not is not overpriced or “too granola” like
Whole Foods.
– Female, 18-34

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THE NEW STORE ON THE BLOCK
Despite issues with perceptions, Whole Foods has a good thing going on: many
consumers are willing to pay top dollar for what they think are outstanding, fresh,
and healthy goods, and will drive out of their way to do so. At the end of July, the
grocer announced that they’re opening a new chain of stores targeted at
millennials11 – 365 by Whole Foods Market, which is “Designed to complement the
Whole Foods Market brand by bringing fresh, healthy food to a broader audience
with a streamlined, quality-meets-value shopping experience, 365 by Whole Foods
Market stores will feature a curated mix of products that adhere to the company’s
industry-leading quality standards in an environment that’s fun and convenient for
shoppers.”12 So Whole Foods but cheaper, smaller, with some sort of whiz-bang
gadgetry to optimize the shopping experience.

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SPREAD THE HEALTH
We asked consumers what they thought of the 365 by Whole Foods Market
concept. And no surprise… they’re really excited as long as they get Whole Foods
quality at traditional grocery store prices. Consumers envision adding 365 into their
current grocery store rotation, visiting to pick up specialty items or particularly
healthy choices. Many agree that lower costs would allow more consumers to take
advantage of healthy foods, and spreading the health (especially to their own dinner
tables!) is something that they’re wildly enthusiastic about. A smaller group is
excited by the store’s smaller footprint and therefore reduced environmental impact.

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I would definitely shop there. I have recently
retired and am now on a fixed income. I like
having a choice of natural foods to choose
from. I try to eat healthy, but I want good
foods to choose from. Anyone would want
lower prices.
– Female, 55+
I will definitely shop at a place like this. This
addresses the exact concerns I have with
Whole Foods. I love the products Whole
Foods offers but the price can be high at
times. This will definitely draw me to shop
there.
– Female, 18-34

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AN IMPOSSIBLE FEAT?
Whole Foods has its work cut out for it in pulling this off. If 365 can deliver cheaper,
best-in-class organics, what does that mean for their original stores, already under
great scrutiny this year after a shareholder sued the company for overcharging
customers in New York City13? If the prices remain high, the brand will struggle to
engage the “broader audience” they’ve hoped for. And if the quality drops, their
reputation is at risk. To top it all off, Whole Foods announced at the end of
September that 1,500 jobs are being cut in order to “free up some more money to
invest in lower prices, marketing communications, and technology upgrades.”14 The
jury is out on whether this will affect consumer perceptions and behavior.

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Whole Foods is just too expensive for my
middle-class family. Even if Whole Foods
365 offers lower prices, it seems unlikely
that it will fit within my current budget at this
stage of my life.
– Female, 35-54
I would expect the food to be too expensive
to change my habits.
– Male, 18-34

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THE MAGIC FORMULA
In the battle for market share, there are two key factors at play – accessibility and
health. More specifically, consumer perceptions of both. While Trader Joe’s is
viewed as more accessible than Whole Foods, especially in terms of price and
value, the latter has a slight advantage when it comes to health, in particular with
the segment of the population that is highly educated in the organic food arena.
That said, it’s not enough to tip the scales in Whole Foods’ favor. Whole Foods will
always be seen as the go-to for fresh foods and, in particular, produce, but Trader
Joe’s is seen as the friendly neighborhood market where you can eat healthy and
find unique items, all on a reasonable budget. Throw Whole Foods’ recent litigations
on overcharging and employee layoffs into the mix, and Trader Joe’s comes out
looking even better.

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365: MAKE IT MORE THAN A “ME TOO”
So where does 365 fit in? Based on what we know about consumer perceptions of Trader
Joe’s and Whole Foods, in order to succeed, 365 by Whole Foods Market needs to be:
• INCLUSIVE: The 365 concept appeals to a wider audience than millennials, and the traditional perception of
the Whole Foods “egotistical yuppie” must go.
• UNIQUE: Uniqueness drives visits – this can be a vital ingredient to accommodate a food intolerance or a
hard-to-find treasure that they’ve come to covet. 365 should carve out a bevy of products unique to their aisles.
• HELPFUL: Consumers are thrilled to spread the health to a broader population. Become a trusted partner for
those just starting out with fresh foods– provide recipes, teach cooking techniques, and share general health
(related to exercise, sleep, etc.) as well.
• VALUABLE: Consumers who have never shopped for organics will likely find the prices to be high, even if
significantly lower than traditional Whole Foods stores. Explain how products can be bundled to get the most
bang for their buck – how many meals can consumers get out of $20? If they splurge on a higher priced
ingredient, how many ways can they use it?
If 365 by Whole Foods Market is able to deliver Whole Foods quality goods without the
“yuppie” factor and at a Trader Joe’s price point, they will carve out a niche for themselves.
The challenge for Whole Foods is to retain Whole Foods’ customers at the traditional
stores while driving traffic to 365. This isn’t necessarily mutually exclusive, as we know
consumers are visiting a variety of stores in order to fulfill their grocery needs,15 but hinges
on 365 looking and feeling different than the parent brand. Trader Joe’s, in the meantime,
will continue on its merry way.

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METHODOLOGY
We recruited thousands of consumers ages 18-65 through various online channels
(Google Consumer Surveys, Survata, online panel) and asked each person one
open-ended question. Questions were formulated using ThoughtPath, our
proprietary framework that is rooted in elements of cognitive psychology. Our
analysts trimmed any irrelevant answers (jibberish) prior to loading the feedback
into Luminoso, our text analytics tool. Luminoso forms broad themes based on
connections within the data set, which our analysts use as a basis to build more
nuanced themes after diving into the data set and looking closely at factors such as
clarity and intensity of language. Percentages reported are based off of the share
that each theme represents within the data set for each question, and are calculated
after the irrelevant data has been cut.

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PERCEPTION THEORY
How would you describe [Trader Joe’s / Whole Foods] to
somebody who is unfamiliar with the store? Please use as
much detail as possible.
N=1,500
As you may or may not know, Whole Foods recently
announced that it will be launching a new store concept
called Whole Foods 365. The stores will utilize innovative
technologies and offer quality products in a smaller
footprint and at a lower cost than current Whole Foods
stores. In as much detail as possible, please describe
how you think the opening of one of these stores in your
neighborhood would affect your shopping habits.
N=1,000
IDENTITY THEORY
Using as much detail as possible, please describe the
type of person that shops at [Trader Joe’s / Whole
Foods].
N=1,500
EXPERIENCE THEORY
Using as much detail as possible, please explain what
makes shopping at [Whole Foods / Trader Joe’s] “worth
it”. What are the specific benefits [Whole Foods / Trader
Joe’s] provides that other grocery stores do not?
N=1,500
THE QUESTIONS:

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INGREDIENTS
1. http://www.groceteria.com/about/a-quick-history-of-the-supermarket/
2. http://www.traderjoes.com/our-story
3. http://www.wholefoodsmarket.com/company-info
4. http://www.bloomberg.com/news/articles/2015-05-14/whole-foods-walmart-costco-steal-
growth-in-organic-groceries
5. http://www.sfgate.com/food/article/Trader-Joe-s-vs-Whole-Foods-A-price-comparison-
6462560.php#item-44548
6. http://fortune.com/2015/08/13/trader-joes-whole-foods-home-value/
7. http://www.forbes.com/sites/retailwire/2015/06/22/whole-foods-365-takes-on-trader-joes/
8. http://time.com/3985325/whole-foods-asparagus-water/
9. http://www.wholefoodsmarket.com/mission-values/core-values
10. http://www.traderjoes.com/our-story
11. http://www.bloomberg.com/news/articles/2015-06-11/whole-foods-new-millennial-focused-
chain-will-be-called-365?cmpid=twtr1
12. http://media.wholefoodsmarket.com/news/whole-foods-market-announces-first-365-by-
whole-foods-market-store-leases
13. http://www.reuters.com/article/2015/08/07/wholefoods-lawsuit-overcharging-
idUSL1N10I1BG20150807
14. http://fortune.com/2015/09/28/whole-foods-tectonic-shift/
15. http://www.us.jll.com/united-states/en-us/Research/JLL-ShopTopic-Grocery-
share.pdf?715e0e88-2c50-49df-8839-d50262c6066a

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