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Whole Hubris

Jeff Wells August 15th, 2008

First it was poor financial results. Right after that, it was an embarrassing meat recall that blew up across the mainstream media. These are trying times indeed for Whole Foods, the super natural chain that, at one point, could do no wrong.

For many people, especially those fond of the “whole paycheck” moniker, this is a delicious tale of corporate hubris. The company unabashedly — some would say arrogantly — sold premium food at premium prices. And what happens? Whole Foods’ pricing plan turns against it in the down economy, and a pesky strain of E. coli suddenly makes its food seem not so premium anymore. Add to that the newly revived court battle with the Federal Trade Commission over the Wild Oats merger, and we practically have a Greek tragedy on our hands.

It’s easy to say “I told you so”, especially since Whole Foods refused to back off even the tiniest bit from its premium image. The company was also expanding fast — probably too fast.

But Whole Foods has done so much right, and that can’t be overlooked. Through the success of its quality and sustainability standards, they’ve pushed the supermarket industry towards more responsible retailing. Just recently they rolled out their humane meat rating system, which was five years in the making. This is unfortunate timing considering the recall, but its still a major innovation for the industry.

Is Whole Foods completely virtuous and flawless in its mission? No — it’s all part of a profitable business plan. But that’s not what’s most important. What’s most important is that, one way or another, these higher standards advance the food industry and eventually make their way to the shopper.

2 Comments to “Whole Hubris”

Tony Schiano Says:

August 20th, 2008 at 10:26 am

Whole Foods is an outstanding operator with a fantastic go-to-market strategy. They fell victim to the pressure of Wall Street for unrealistic growth and returns. Also, like many entrepreneurs { Schulz etc] Mackey fell victim to his own press and success. Also, having participated in many acquistions and mergers, I also know that none work as well as expected,are twice as complicated as expected, and take time to absorb and yield the desired returns. That being said, the healthy eating trends are here to stay, and so is Whole Foods, The nations premiere Natural and Organic products purveyor. But, taking stock of the old addage ” poor people need a bargain, and rich people love a bargain ” would help Mackey extend his reach.
Jeff Wells Says:

August 20th, 2008 at 12:51 pm

Thanks for writing, Tony. You have some really great insights to add to this story. Whole Foods has indeed been an outstanding operator, and it’ll be interesting to see how they respond to these challenges ahead. If this economic slowdown doesn’t last for much longer, and the FTC doesn’t block the Wild Oats merger, I think Whole Foods can come out of this with their premium image still mostly intact. However, if the FTC does intervene and/or these trying times continue, Whole Foods will have to make major adjustments. They’re a big retailer now, and they can’t afford to ignore the pocketbook realities that many shoppers face.