PR & thought leadership, strategy

3 crisis PR lessons from the Whole Foods pricing debacle

Sandra Stewart | July 21, 2015

What can we learn about crisis communications from the media frenzy that erupted when New York City’s Department of Consumer Affairs (DCA) charged that Whole Foods regularly overpriced packaged fresh foods? (I mean, beyond the obvious: if your customers have given you the nickname “Whole Paycheck” and you are running a marketing campaign with the theme “values matter,” your response to accusations of persistent overcharging will be held to a high standard.) The following three crisis PR lessons stand out.

Don’t deny it or blame the messenger
When the news broke, Whole Foods’ response was this statement:

“We disagree with the DCA’s overreaching allegations and we are vigorously defending ourselves. We cooperated fully with the DCA from the beginning until we disagreed with their grossly excessive monetary demands. Despite our requests to the DCA, they have not provided evidence to back up their demands nor have they requested any additional information from us, but instead have taken this to the media to coerce us. Our customers are our number one stakeholder and we highly value their trust in us.”

So, in a nutshell: We haven’t really done anything wrong, but if we had, the problem is that an agency charged with protecting consumers has decided to tell consumers about it and wants us to pay fines.

Not surprisingly, this gambit did not produce a positive change in ongoing coverage and commentary on the issue.

Accept responsibility—promptly and for real
Six days after the story broke (a slow response that allowed negative coverage to accumulate), Whole Foods posted a video in which co-CEOs John Mackey and Walter Robb addressed the problem. Robb acknowledged “Straight up, we made some mistakes,” and then the two went on to say the mistakes were unintentional—a point they supported by noting that some items were underpriced—and that the “very very small percentage” of weighing errors were an understandable side effect of Whole Foods’ “hands-on approach to bringing you fresh food.”

This led to headlines like this one in Slate: “Whole Foods Is Sorry It Systematically Lied About Some of Its Prices” and this one in the Washington Post: “Whole Foods Admits Overcharging, Blames Employees and Apologizes.”

Why the snark? It never looks good to blame the people at the bottom, and employees don’t hire and train themselves. The Whole Food response left people to wonder whether accurate pricing had been a priority in the past.

Explain how you will address the problem
Whole Foods got this one right. “We are improving our training regarding in-store packaging, weighing and labeling processes,” said the statement accompanying the video. “Additionally, we have implemented a companywide third-party auditing process for all of our stores, and we will provide an update in the next 45 days so that customers can follow our progress.”

That’s a solid to-do list, and makes a start at restoring customer confidence. The next steps: following through on the promise, and ideally involving the DCA in verifying improvement.

The biggest lesson: live your brand
That leads me to the biggest lesson, which is about the nexus of brand integrity and business management: if you want customers to trust you, you have to address problems when you see them, not when they blow up in your face. (That’s why actions that run counter to claims cause a huge point deduction in the Thinkshift Credibility Quotient™ communications rating system.)

A similar investigation in California led to Whole Foods agreeing last year to pay close to $800,000 in penalties and initiate a stringent in-house pricing accuracy effort at all stores in the state. It looks like Whole Foods saw this train coming, and chose to just keep standing in the middle of the tracks. There’s no crisis communications plan that can make a decision like that look good.

Update: Whole Foods reported July 29 that same-store growth slowed dramatically after the mislabeling story broke.

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