Shares of Whole Foods dipped Tuesday after Goldman Sachs downgraded the stock to "sell" from "neutral," citing competition from all parts of the grocery industry and online.
"Whole Foods is experiencing a competitive barrage, losing share in its core natural and organic business to a variety of players," Goldman analysts said in a note to clients. "Wellness has gone mass, and it is not coming back, never again to be relegated to niche specialty retailers serving price-insensitive, early adopters."
Shares of the grocery retailer have fallen more than 15 percent year to date, trading down more than 1 percent at $34.18 on Tuesday. Goldman set a $31 price target for WFM, which would be a 10 percent fall from Monday's close.
Goldman is guarded on natural and organic incumbents like Whole Foods, which could be eclipsed by lower-priced, more convenient challengers. Some of these smaller players taking market share include Trader Joe's and The Fresh Market. Costco and Kroger could be the biggest threats to Whole Foods because of a focus on price and quality, the note said.
"The group has raised the competitive bar in natural and organic: a differentiated product offering is no longer sufficient," the Goldman note said.