Opinion

Why Whole Foods' play for millennials is misguided segmentation

Whole Foods hit the headlines in the US last week after it announced a chain of stores to attract the mysterious millennial generation. But this segmentation is a mistake, writes Katie Martell, CMO and co-founder of US start-up Cintell.

Whole Foods makes a play for millennials with plans to launch lower cost store format next year
Whole Foods makes a play for millennials with plans to launch lower cost store format next year

As Whole Foods made its announcement, stock prices suffered and headlines were largely negative as analysts and industry insiders debated whether this approach would effectively hit home with the intended target of 18- to 34-year-old consumers.

One motivating factor for the decision is the sheer size of this generation. This year millennials will overtake Baby Boomers as the largest living generation in the US with 75.3m members, according to recent population projects released by the U.S. Census Bureau.

Yum, Stale Buzzword Soup

But the issue with Whole Foods’ strategy in making this proclamation exists largely in the way in which it was positioned to the public.

In my humble millennial opinion, Whole Foods is cooking up some buzzword soup and we’re all invited to take a sip - despite the fact that it’s getting a little stale

Few details were included in the announcement, only that these new, smaller stores will offer all-natural food at lower prices and be specifically geared to this demographic segment. They will be "tech-savvy", more "streamlined" in design and "unlike any of the other stores you’re seeing out there" (whatever that means).

IMHMO (In My Humble Millennial Opinion), Whole Foods is cooking up some buzzword soup and we’re all invited to take a sip - despite the fact that it’s getting a little stale.

Robyn Bolton sums it up nicely in her article for the Harvard Business Review:

She writes: "By describing this new concept as 'geared toward millennial shoppers', Whole Foods is essentially saying one (or both) of the following:

1. "Gen X and Baby Boomer shoppers are fine with or even prefer old, cluttered stores that sell a confusing array of stuff at high prices.

2. "We (Whole Foods) need to create new stores because our current ones are old and cluttered and sell all sorts of poorly organized stuff at high prices."

At least – that’s what consumers of all generations are reading between the lines.

Stale Demographic Segmentation 

Robyn suggests the issue here is really in a flawed, underlying segmentation approach that is too reliant on demographics alone.

"By relying on demographics to define a consumer base, executives are implicitly, or explicitly, saying that all people of a certain demographic (in this case the same age cohort) are the same and that they are also distinctly different from everyone in other demographics."

Whole Foods has opted to go the general, irrelevant, and potentially offensive route to a generation of 75.3m consumers who so greatly value their individuality

She argues that a better way to approach this would have been to consider the jobs-to-be-done.

Notable Harvard Business School Professor Clayton Christensen first introduced the concept of "jobs-to-be-done" about 12 year ago. This strategy takes a different approach to market segmentation, using the deeper motivations surrounding use of a product than the traditional demographic details such as age, race, location, etc.

"By understanding consumers’ jobs, companies can identify what drives their behavior and their buying decisions—and then create offerings that resolve their most important and unsatisfied jobs," writes Robyn.

These new stores from Whole Foods may exist to meet a variety of jobs-to-be-done ranging from functional to social to emotional, but these jobs are not specific to the millennial generation, and details remain to be seen exactly how they will differentiate.

I can’t help but wonder if this announcement would have fared better in the minds of the consumers for which it was intended had Whole Foods taken a more modern approach to segmentation, or at least conveyed that message more clearly in their announcement.

Whole Foods missed an opportunity to position the new stores in a highly relevant way, instead opting to go the general, irrelevant, and potentially offensive route to a generation of 75.3m consumers who so greatly value their individuality.