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Whole Foods Market has ridden through the recession, keeping its ideals without lowering its standards

By Steve Kaufman

Which is the real Whole Foods Market? For a long time, the specialty retailer has been juggling two images for two polar opposites of the food marketplace.

One Whole Foods is the principled purveyor of organic, nutritious, carefully selected foods, an unbending retail philosophy that has won it fierce loyalty among its base: naturalists at the most ascetic corner of the market.

The other Whole Foods is known for the high prices that have earned it the nickname “Whole Paycheck.” Its glamour food items, such as heirloom tomatoes and artisanal cheeses, appeal to its base: foodies at the most upscale corner of the market.

For 30 years, Whole Foods made this schizophrenia work by driving the mindset that nutrition and quality are worth paying extra for.

Then came the recession, and that mindset shifted. With 10 percent unemployment and $4-a-gallon gasoline, many consumers decided it was all right to buy their tomatoes in the supermarket and their families’ meals off the dollar menus.

Whole Foods Market’s sales stuttered and new-store expansion slowed down. But it is recovering. In the second quarter this year, sales increased 12 percent and same-store sales were up 7.8 percent. “These are the strongest overall results we have reported in the past five years,” said co-founder and co-ceo John Mackey.

Buoyed by rebounding sales, the retailer is regaining its growth initiative. It recently announced it will open 22 new stores in 2012 and even more in ensuing years. Some will be overseas, some will be smaller, but the brand is on the move again.

Co-ceo Walter Robb, who joined Whole Foods Market in 1991 (as a single-store operator in Mill Valley, Calif.), has said the retailer now has the confidence that it can build smaller, 25,000-square-foot stores “and make a lot of money” – even in less-affluent markets – while still pursuing its “sweet-spot” of 35,000-to-50,000-square-foot stores (or even larger) in markets that, he says, “deserve them.”

“Deserve them” seems like an odd choice of words. But this messianic retail organization has always believed it was spreading the true word about nutrition and responsibility. Mackey was a student of philosophy and religion working his way through the University of Texas at a vegetarian co-op when, in 1978, he began his own health food venture, Safer Way.

Within two years, Safer Way merged with Clarksville Natural Grocery and the Whole Foods Market brand was inaugurated. Over the next decade, the retailer expanded, largely by acquiring other natural foods chains.