I shouldn't gloat.
Some years ago, I refused absolutely to shop at Whole Foods. It wasn't just the high prices that later led to the nickname of "Whole Paycheck"; it wasn't just the unnecessarily vicious anti-union attitudes of its founder and management. It was these factors combined with the threat it posed to my most beloved of institutions, the new-wave consumer-owned food co-op. Eventually, it came to a point where it wouldn't matter any more. Co-ops had shrunk in number, but those that survived generally gained in strength. A lot of this was down to a tipping point in consumer preference for organic and artisanal foods, especially amongst the economic upper-middle classes. This benefitted both Whole Foods and its major competitor Wild Oats, as well as Fresh & Wild in the UK and food co-ops throughout the US.
In the past year or so, Whole Foods has acquired both Wild Oats and Fresh&Wild. Almost exactly a year ago, Whole Foods, with great fanfare, announced its opening of the first UK outlet, in London, natch, in Kensington, natch. Just in time for the so-called "credit crunch".
Last week, Whole Foods announced that it had lost $18 million in its first year in London. Of course it could have been expecting losses in any case, and on such an expensive piece of real estate, with British shoppers not being in the mood for costly food-shopping experiments, it should have expected the near disastrous results.
In the US, when the overall profit slump triggered a share sell-off the next day, Whole Foods laid most of the blame not on its ill-fated expansion into the UK, but on the costs associated with acquiring Wild Oats. Well, maybe.
Now Whole Foods is pursuing a brilliant strategy (in the US only I presume) of sales, discounts and budget-related customer education, trying to reverse its "Whole Paycheck" image. As I said when they opened the London branch, we'll see.
11 August 2008
I shouldn't gloat.