Reveries yesterday had a terrific article on Whole Foods:
"We're just basically outcompeting everyone," says John Mackey, explaining the success of his Whole Foods "organic" supermarket chain, as quoted by Seth Lubove in Forbes (2/14/05). He sure is: "Safeway and Albertsons have annual sales ten times as large," as Whole Foods, "but are valued at only $8 billion apiece." Whole Foods is valued at $6 billion. Winn-Dixie has "six times as many stores" as Whole Foods and "three times as much in sales," but "is valued at just 10 percent of Whole Foods' market value." While "profits are expected to fall 31 percent at Safeway and 6 percent at Albertsons for 2004," and A&P, Pathmark and Winn-Dixie "piled up a total of $195 million in losses" --- at Whole Foods "net income rose 32 percent to $137 million." Whole Foods, wholefoods.com, today has 166 stores and generates $4 billion in revenue -- its stock, trading at about $100 a share, is "up more than fivefold in five years."
Why?
Some of that performance is thanks to "organic foods, which can carry a price premium of 40 percent to 175 percent over regular foods."
But more importantly...
- "It's theater."
- "It's a very visual style."
- It's a mission: "Management's job is to take care of employees. The employees' job is to take care of the customers. Happy customers take care of the shareholders. It's a virtuous circle."
- It's grass-roots: "We allow innovation and experimentation to occur at the store level."
- It's taking care of the basics, like having enough checkouts open.
I can attest to this. I live around the corner from a Simon David, which used to be an upscale brand. Now it's trashy, there's no experience, and the employees are lethargic. I drive right past it and down the road a few miles to shop at Whole Foods... where I cringe at the prices but love the experience. They obviously pay a lot more for good employees, all of whom are friendly, upbeat and caring. And it's obviously paying off for the company. You get out what you put into it.
"They obviously pay a lot more for good employees, all of whom are friendly, upbeat and caring."
You're not paying for the employees, you're paying to opt out of the economies of scale represented by the large commercial farms. There is truly no significant science to support the now ubiquitous thesis that organic is somehow a more healthy choice - but the media is in the business of titillating as opposed to informing, so what one mostly reads regarding commercial farming, GMO, et al. is sensationalized. Pesticides and preservatives are your friends – humans have been using both in one form or another for millennia – and the pertinent science (toxicology) is predicated on the notion that ‘dose makes the poison.’ In other words, in the doses that we imbibe when we consume say, commercially grown fruit, the pesticide residue is non-toxic and more importantly, means there won’t be an infestation of something really genuinely scary inside that piece of fruit.
Anyway, I wonder if the helpfulness and cheer you encounter with respect to the cast of employees at such establishments (which I have also noted) is not simply social reinforcement of group identity. You know – like, “Hey, since you’re shopping here, you must be a party to my socio-political worldview, so I’ll demonstrate every pleasantry so as to inform you of our co-identity.” You should try driving up in a Range Rover, wearing a ‘coming to jesus’ tee, a large crucifix on a chain and a GOP ball-cap and casually eating a big mac while strolling through “Whole Foods” and see if you’re met with the same congeniality.
Posted by: malaclypse the tertiary | February 10, 2005 at 09:08 AM
hey john, thanks for the feedback...having lived in San Diego, very familiar with TJs and now living in Austing, very familiar with Whole Foods...and agree with your assessment that TJs would likely be the first to blog...wonder which will see the value first?
success is a funny thing and it can lead to complacency...me, if I knew that my current customer base and even more potential customers could be engaged in a new communication channel, then I would be busting my hump to beat the competition...but, that's just me.
again, thanks for the info and Jennifer, sorry for hijacking your blog....
Posted by: jbr | February 09, 2005 at 08:23 AM
fyi ... Whole Foods Market is aware of blogs and blogging. (It is interesting to note their last two national marketing directors are blogging these days: Kirsten over at re:invention and myself at Brand Autopsy.)
One of WFM's competitors, Trader Joe's, seems to be in a better place to begin blogging. TJs brand voice has a nice conversational tone that would make for an engaging blog. For a taste of TJ's brand voice, check out their Fearless Flyer:
http://www.traderjoes.com/fearless/index.asp
Posted by: johnmoore (from Brand Autopsy)) | February 09, 2005 at 05:29 AM
Don't miss the "food porn" article about WF in the current Forbes...
Posted by: David Foster | February 08, 2005 at 02:34 PM
so, when will you contact them about creating a blog? shouldn't they stay ahead of the curve and competition? people blog about them, but i don't think they are blogging. like any really smart company, they should be having the coversation with the market. go help them see the future....
Posted by: jbr | February 08, 2005 at 09:01 AM