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If ever there was a bad time to launch a premium-priced, organic food-focused supermarket, then the summer of 2007, just a few months before the US financial markets melted down, was probably it.

Unfortunately for Whole Foods Market, that is exactly when it opened the doors of its flagship store in London's upmarket Kensington.

Spread over three floors, it boasts fresh produce, a Sushi bar, an extensive wine department, a dedicated climate-controlled cheese room, kitchenwares and a beauty counter.

While this once seemed merely indul­gent, since the recession has taken hold, such excess has come to look absurd. Ostrich eggs, one of Whole Foods' luxury items, make a great talking point for a West London dinner party but are hardly a kitchen-cupboard staple.

Two years after opening, Whole Foods' Kensington store has racked up losses of nearly £4m. The company's manage­ment had also trumpeted aggressive plans to open up to 70 big stores in cities across Britain, but these appear to have been shelved.

Instead it has focused on rebranding the four London Fresh & Wild stores it owns, but these are more mini-marts than superstores. Last month, the retailer reported that second-quarter profits fell 32% year-on-year. Same-store sales decreased 4.8%.

What can Whole Foods do to stay relevant to cash-strapped consumers? We asked James Murphy, founder of Adam & Eve, which handles John Lewis, and Debbie Smith, managing director of Meteorite, whose clients include House of Fraser and Harrods.

Debbie Smith managing director, Meteorite

The growth in organic and whole foods has seemed unstoppable. Retail sales have increased by an average of 30% a year for the past 30 years.

Driven by a significant shift toward environmental issues and healthy eating, the organic trend has expanded beyond the traditional confines of Guardian readers. Even Asda reported a healthy growth in organic sales last year.

However, organic food never achiev­ed true mass appeal. Pricing has kept it out of reach of consumers on a budget, and now, with the reces­sion in full swing, it's not surprising that Whole Foods Market is suf­fering. Even its traditionally reces­sion-proof customers in Kensington are not immune to the credit crunch, and are now holding on to their purse strings, cutting back on anything perceived as extravagant.

In a recession, people's priorities naturally change. Despite IGD research in February showing a 5% decline in shoppers buying organic foods, there remains a strong core of organic shoppers. With eating-in becoming the new eating-out, Whole Foods should be able to ride out this recession and come out healthier on the other side.

Remedy

• Ensure the shopping experience is second to none. Many customer reviews are less than complementary.
• Reinforce the health and environment­al benefits of organic and whole foods.
• Package ‘eating-in meals' in a similar way to Marks & Spencer, by reinforcing convenience and taste
• Focus on loyal customers, as these are the ones who will carry the stores through the recession. Consider introducing a loyalty card.
• Above all, keep a tight rein on costs and waste.

James Murphy founder, Adam & Eve

The launch of Whole Foods' store in Kensington seemed to have more in common with the ‘retail as an experi­ence' glitz of London icons such as Selfridges than the down-to-earth, no-frills approach of the organic food sector. It also smacked of the US ‘retail expansionism' that saw Starbucks over-reach itself and come to grief - all at a time when food retail has had to adjust to dramatic new realities.

At a macro level, the high-end consu­mers in Whole Foods' target are having to trade-off principles against the need to economise. The ‘Lidl effect' has been widely noted, as prosperous shoppers look for canny deals on commodities. Supermarket own-brands are taking share at the expense of the organic sector. At a micro, local level, more than a dozen retailers have shut down around Kensington High Street in the past year, and there are three Waitrose branches in the same borough, pushing affordable quality with its new Essentials range. Most tellingly, Whole Foods' flagship store nowhere to park for customers still prosperous enough to enjoy this premium food emporium.

Remedy

• Cut back from three floors, and sublet to a neighbour who will drive footfall.
• Improve profitability by creating more intensive use of the space. Slim down the ranging and cut down waste.
• Move away from exotic showpieces to ‘down-to-earth' value organics, make it more accessible, more appropriate and more of a competitor to supermarkets.
• As small retailers close, look at short-term opportunities to get these smaller units at good rents, and create a Whole Foods Metro offer, closer to prosperous communities.