Interesting piece in Slate looking at how Whole Foods has been grappling with the recession. Some excerpts:
• “If Whole Foods were perishable, it probably would have expired this past year. But instead, it has done surprisingly well, holding its own as a high-end food spot in what's now been a yearlong assault on any store considered expensive. While its most recent earnings report wasn't dazzling – revenue compared to last year’s was flat – it wasn't dismal, either. And many analysts are predicting increased sales to be announced in the earnings report next week.”
• “So what's kept Whole Foods healthy? ‘We have shown that we can adjust if we have to,’ co-president and COO A.C. Gallo said in May. The ever-expanding grocer has markedly scaled back and is opening only half the stores it had planned for 2009 … Whole Foods is shifting away from the mega-mart model and focusing instead on opening smaller, less labor-intensive stores.”
• “Instead of hunkering down and holding out for the economy to recover, Whole Foods began to experiment with ways of convincing America that it was, in fact, an affordable place to shop, without actually slashing prices storewide.”
• “If Whole Foods were perishable, it probably would have expired this past year. But instead, it has done surprisingly well, holding its own as a high-end food spot in what's now been a yearlong assault on any store considered expensive. While its most recent earnings report wasn't dazzling – revenue compared to last year’s was flat – it wasn't dismal, either. And many analysts are predicting increased sales to be announced in the earnings report next week.”
• “So what's kept Whole Foods healthy? ‘We have shown that we can adjust if we have to,’ co-president and COO A.C. Gallo said in May. The ever-expanding grocer has markedly scaled back and is opening only half the stores it had planned for 2009 … Whole Foods is shifting away from the mega-mart model and focusing instead on opening smaller, less labor-intensive stores.”
• “Instead of hunkering down and holding out for the economy to recover, Whole Foods began to experiment with ways of convincing America that it was, in fact, an affordable place to shop, without actually slashing prices storewide.”
- KC's View:
-
One of the real challenges that Whole Foods had to deal with is the fact that cash-strapped mainstream consumers – as opposed to its core shoppers – were choosing to go elsewhere because that was an easy way to save money. And Whole Foods’ growth strategy hinged on an ability to expand its appeal beyond its core.
That said – and I say this at the risk of being criticized by people who think I am entirely too sympathetic to the company – I see no reason to think that Whole Foods won’t survive the recession and end up being a stronger, leaner company. Sure, it has some problem spots; there may be folks in Austin who wonder what they were thinking when they decided to expand into the UK.
But if it opens smaller stores with less labor that continue to move the company away from its ‘Whole Paycheck” image…the likelihood is that Whole Foods will do just fine. It may not be the kind of fast-growth company that Wall Street traditionally adores, but it can be a perfectly viable retailing entity.
