Thursday, June 18, 1998
When Whole Foods Market opens its 87th store in the Del Monte Center on June 24, will the event simply be another example of another corporate giant, swooping in to "crush the competition," as founder John Mackey has said, or will Whole Foods be the kind of touchy-feely, good for you, good for the community kind of place?
The answer, apparently, is both. Whole Foods has been criticized by consumers for the company''s aggressive growth strategy--swooping into towns, buying out beloved local health food hang-outs, and erecting monolithic Whole Foods Markets in their place. Company officials acknowledge that Whole Foods has been called "the whores of the [health food] industry," for stocking products with refined sugar, alcohol and red meat alongside organic sprouts and tofu.
But this diversity may be the very secret of Whole Foods'' $1 billion-a-year phenomenal success. "We don''t believe in preaching," says Peggy Miars, marketing director for the new Monterey store. "We''re just offering what people want."
And what people want from their grocery store has changed a great deal in the last 20 years. Consumers are savvier and more health conscious. They''re also busier. Few people have time to cook dinner and eat with their families, much less run around town buying organic produce here and toilet paper there. Whole Foods responds by offering bigger stores--the Monterey store is 25,000 square-feet--with more and more products, from traditional grocery store fare to organics, gourmet products and prepared foods, not to mention the juice and coffee bar, deli, and personal care departments.
According to figures from the Food Marketing Institute, natural and organic foods are themselves an exploding market-- a $15 billion-a-year industry, compared to just $178 million 20 years ago. While natural and organics are still a drop in the grocery bucket compared to total supermarket sales of $436 billion for 1997, Institute studies show the growth rate for organic and natural foods is projected to be as much as 30 percent annually, compared to a meager 2-3 percent growth rate for conventional supermarkets. Statistics from Whole Foods'' figures suggest the company is leading the way, with 900 percent growth over the last eight years.
The time crunch that today brings shoppers into giant one-stop emporiums also has them spending more on prepared foods than ever before--as much as half their food budgets, according to industry analysts. Grocery stores, in an attempt to hang onto your food dollar, have begun offering more ready-to-eat meals within the grocery store.
Whole Foods, again outshining the competition, has met the demand for healthier, gourmet meals-to-go. In addition to the sushi bar, bakery and juice bar, they''ll be offering hormone- and steroid-free rotisserie rocky hens, a full gourmet deli, where, says prepared foods team leader Robert Kershner, "we encourage sampling," and an entire area of pre-packaged foods.
Walking into a Whole Foods, it''s hard to see remnants of the old school health-food co-op, with bulk food bins and soft-spoken hippies populating the aisles, but according to Mackey, that''s never been what Whole Foods was about. "We''re not Holy Foods," Mackey is fond of saying. "We didn''t want to send people elsewhere to shop." It''s working. People are coming--and spending--in droves. The company continues to buy out the competition and open new stores--more than 50 openings are planned for the next five years.
And the future, for Whole Foods, is big. With upcoming stores averaging 33,000 square-feet, Mackey has his competitive sights set on conventional supermarkets: the Luckys and the Safeways of the world.
"They are definitely a competitor," says Judie Decker, a Lucky Stores spokeswoman. "By virtue of their location. They''re no different than any competitor," she says.
While many grocery stores have increased their organic offerings to respond to consumer demand, Decker says some Lucky stores have been carrying organic produce since the mid-''80s. "Only the stores with customer interest," she says. As organics become more available at reasonable prices, she says, Lucky will up the ante. "They [Whole Foods] market to a niche, as do we--everyday low prices is our niche," she says.
Low prices is one of the few things Whole Foods is not known for. Organics, with their higher production costs, can be as much as three times more expensive than conventional foods. But Whole Foods is going after that market, too, with their "365 line" of private-label, lower-cost items. Mackey has called it their "Trader Joe silver bullet," referring to the wildly popular, gourmet specialty store known for its lower prices.
Whole Foods may also be a great place to work. In a county that finds increasingly more of its employees working in the service industries, for low wages and few benefits, Whole Foods is becoming a model of corporate counterculture. Employees are called team members. Miars, like many of the Monterey store employees, came from the old Granary store. She says her benefits are better at Whole Foods and the employees make each store what it is.
"Team members make a lot of decisions," she says. "Each store is unique, because team members really have a voice." Team members evaluate bosses'' salaries, vote on hires, and get financial statements for their departments. Fortune even recently named Whole Foods one of the top 100 places to work.
Whole Foods Markets also claims to be socially active. A cornerstone is "National 5% Day." Each store, on April 29, donates 5 percent of Whole Foods'' total sales to nonprofit groups.
In addition to the National 5% Day, individual stores do similar benefits on the local level. On June 22, the Monterey store is throwing a pre-opening benefit for Save Our Shores and the Ventana Wilderness. Two days later, for their grand opening, 5 percent of the day''s sales is being earmarked for the American Red Cross.
It may be hard for die-hard, anti-corporate, pure-food devotees to swallow this giant, flashy version of the old co-op. But it becomes equally difficult to fault a company that responds to changing customer demographics, treats employees with respect, and gives back to the community. Shoppers will have a chance to make up their own minds next week. cw