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Whole Foods: VMSD/Peter Glen Retailer of the Year

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

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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.

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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.

Their stores became a symbol of the brand: colorfully stacked produce; hand-lettered chalkboard signage; raw wood produce crates; sophisticated curved gondolas; lots of sampling; and lots of enthusiastic, knowledgeable workers preaching the merits of antioxidant tea, all-natural yogurt and mercury-free tuna from the South China Sea.

Their stores also became a symbol of their surroundings. “No two stores are alike,” says Christine Sturch, interior design and branding coordinator for the retailer’s Chicago-based Midwest region. “Each store is designed to reflect the personality of the local resources and community. So in California, for example, we may emphasize the produce; in the Midwest, the meat; on the East Coast, the seafood.”

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To that point, Whole Foods Market gives its 11 regional offices autonomy to create. “Each region is encouraged to do its own design experimentation,” says John Beckham, an Austin, Texas, architect who has been designing stores for the retailer since 1993. “They know their customers and their merchandise mix. That leads to new ideas and visions, a series of best practices shared across the country.”

Every time a store opens, photos are taken and distributed around the organization. If it works, those ideas may be incorporated in other areas.

And if it doesn’t work? “Then we won’t do it again,” says Sturch. “Nobody here is unwilling to try something new. If we do something that doesn’t work, the company culture is just to learn from it, fix it and move on.”
She says Robb and president and chief operating officer A.C. Gallo regularly tour the regions, making sure all this experimentation still executes the retailer’s basic values. “It’s a simple idea,” says Beckham. “Each store is a place of exploration. It’s carefully crafted and the food is always the main focus.”

A few years ago, says Beckham, Robb toured Europe for ideas. In Berlin’s Kaufhaus des Westens (or KaDeWe), he saw an entire floor comprised of food islands featuring an array of different cuisines for in-store dining.

“His vision was to bring that European in-store dining experience into his American stores,” the architect says. “The food court concept has been around for a while, but integrating the dining experience directly into the shopping experience was not something that American consumers were familiar with. And it turns out they love the experience.”

And that perhaps answers the question: “Which is the real Whole Foods?” Yes, it’s a retailer that values the purity of what food can be and asks that its customers appreciate that effort, even when the prices seem higher. But ultimately, Whole Foods Market places its greatest value on the shoppers and their experiences inside the store.

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“They want to dispel the notion that a store is a place where people buy food and then go home,” says Beckham. “It’s a communal place to gather, linger and honor the food.”

To learn more about IRDC, featuring a Q&A session with the Whole Foods design team, visit www.irdconline.com.

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