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Whole Foods Market

Whole Foods to test first rewards program

Bruce Horovitz
USA TODAY

Whole Foods — feeling the heat of new competition in the natural and organic arena — is about to test a program that will reward folks just for shopping there.

A woman shops at the Whole Foods Market in Woodmere Village, Ohio, on March 27, 2014.

Beginning this month, the organic and natural grocery chain will test its first-ever national affinity program, Whole Foods Market Rewards, at its store in Princeton, N.J., followed by a larger test in the Philadelphia market later this year. If the program is a hit, it could roll out nationally by late 2015, spokesman Michael Silverman says.

"Our customers have wanted an affinity program for some time," said Silverman in an e-mail. "With such strong existing customer demand for a program like this, we believe it will enhance existing customer loyalty and drive new customers to shop Whole Foods Market stores."

Whole Foods shoppers will have the choice of using a rewards card or a mobile app downloaded from Apple. Last week Whole Foods announced that it would be among the first retailers to accept Apple Pay, Apple's new mobile payment system.

But the Whole Foods rewards program won't just be about collecting "points" for dollars, says Silverman. While he declined to discuss the details of the program, Silverman says there also will be various "experiential" rewards, such as being able to exchange points for free cooking classes.

The rewards, he says, will be personalized "based on individual preferences."

For Whole Foods, which posted nearly $13 billion in sales last year, it's all about convincing customers that it's something more than its "Whole Paycheck" image. By rewarding shoppers with points that can be converted into discounts or special rewards, the 34-year-old Austin-based chain hopes that it can convince cost-conscious shoppers who have moved on to less-expensive natural and organic options, including Walmart, Safeway and Trader Joe's, to come back. At the same time, the program would help Whole Foods keep better tabs on its shoppers and track their shopping habits.

While privacy can be a thorny issue, in a still-shaky economy, most shoppers have moved beyond the privacy concerns of rewards cards and, instead, embraced the benefits of free stuff. The Starbucks Rewards program, for example, is one of the most successful-ever ventures for Starbucks. Not only do millions of customers use it daily, but it gives Starbucks a window into their purchasing habits. Panera's "My Panera" loyalty program also is hugely successful.

But isn't Whole Foods above being just another card-swiping, data-collecting retailer?

"The program has the potential to generate a significant amount of data that can be mined to drive better business decisions," says Stewart Samuel, program director at consumer goods specialist IGD Canada. It also will help Whole Foods to compete against rivals that are bulking up on organic offerings, such as Kroger and Safeway, which already have loyalty programs.

Whole Foods could certainly use the pick-me-up that might come with a rewards program. Its stock is down more than 30% this year, and in July the chain cut its sales forecast for the fiscal year. To stay competitive, Whole Foods has recently lowered prices on some packaged goods and even on some produce items.

The key to the rewards program's success, Samuel says, will be exactly how Whole Foods "embeds" it. It's a fine line between amassing data — and making each shopper feel somehow special by responding with a personalized lure based upon the specific data collected.

Think about it. Maybe you're stressed-out. If your Whole Foods card offers you, say, a free spa treatment — just for buying your groceries there — will that nudge you to come back, again?

Whole Foods is hoping it's in the bag.

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