Whole Foods tests discount on house brand

Whole Foods Market, facing intensifying competition from organic and natural-food chains, is testing a loyalty program that gives customers a 10 percent discount on its “365” private-label line of groceries.

America’s largest purveyor of natural foods is testing the Hello 365 loyalty program in eight stores in Illinois, Indiana and Florida, Liz Burkhart, a spokeswoman for the Austin, Texas-based company, said. The program will encourage shoppers to try more 365 Everyday Value items, she said.

“If it’s successful, we’ll look at rolling it out into some other markets,” Burkhart said.

Whole Foods, which has about 360 stores, including one in Vancouver, is grappling with rising competition from specialty grocers as well as mainstream chains that have added upscale provisions to their shelves. Whole Foods’ reputation as an upscale grocer might be a turnoff at a time when many households are budgeting.

The company earlier this month cut its fiscal 2014 profit and revenue forecasts amid slowing sales growth. Sales at stores open at least a year rose 5.9 in the company’s fourth quarter, which ended Sept. 29, and was the slowest pace in 15 quarters.

“We are not immune to the larger macro environment,” Co-chief Executive Officer John Mackey said in a conference call on Nov. 6. “Discretionary spending has been impacted, as consumer confidence has dropped to a six-month low.”

Whole Foods introduced the 365 private-label line in 1997 to lure value-conscious shoppers.

House brands generated about 11 percent of retail sales in the year that ended September 2012. Private-label merchandise typically generates fatter margins than branded goods.