Whole Foods Market, Inc. (WFMI)

nnena (83.57) Submitted: 3/20/2009 10:36:52 AM

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That's a good point, but if Whole Foods better marketed their conventional products, which I have found to be cheaper than traditional stores on several occasions, then they could gain a slight advantage. This doesn't mean that they need to change their model, but it could give them the boost that they need.

omazzoni (< 20) Submitted: 8/3/2009 11:09:20 PM

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In defense of Whole Foods outperforming, we should consider that compared to other market chains she doesn't have to pay millions of dollars to a CEO each year. Also, I've been in Winn-Dixie and I've been in Whole Foods. People who are interested in "whole foods" are also interested in the rich and calming atmosphere that the store provides (this is something not offered by most other stores). And in response to the comment that all other chain stores have to do is allocate space, I don't think they have anywhere near as many shelves as they would need to accomodate the vastness of a selection that would rival that of Whole Foods. Additionally, extant stores would have to almost completely bifurcate their stock, seperating the organic from the inorganic. At Whole Foods shoppers don't have to spend time to see if what they are holding in their hands is in fact whole....that may not be the case at other stores.

insomnia (< 20) Submitted: 8/17/2009 5:28:04 AM

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Whole Foods CEO has certainly thrown a wrench in the possibility of outperforming, at least for the next few quarters.

This is a stock that has done quite well, based on prior performance, but when Mackey called some of their products "junk", and then proceeded to let Murdoch's WSJ use him for political fodder, alienating tens of thousands of Whole Foods customers, who have been using Facebook and Twitter to organize a boycott and even a few protests already, well... it doesn't bode well.

Mackey seems to have practical business skills, but Whole Foods has outgrown him. Clearly, he can't control his message and keep his own personal politics out of the business, especially when it's important that he take cares not to offend his activist-oriented customer base.

Whole Foods PR should be the easiest thing in the world to manage, but he has permanently hurt the company's reputation, and his actions will invite increased corporate watchdog action from unions and those who feel that Whole Foods isn't as supportive of local organic farming as it should be. Indeed, they make deals with big national companies that allow them to lowball the price, which tends to encourage fewer local products and the adoption of weaker standards of what is "organic".

In short, his actions are helping to "Microsoft" Whole Foods... and not in a good way. Ultimately, their size, their fast growth, and their corporate behavior will make them attractive targets, especially if Mackey is kept around as CEO... and this PR disaster creates a great opportunity for other supermarkets to expand further into Whole Foods' territory, as well as for the plethora of farmers markets which are growing rapidly in both size and number nationwide.

anothy (< 20) Submitted: 8/22/2009 5:43:10 PM

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I think you're phenomenally overstating the impact this "boycott" is likely to have on Whole Foods, in *any* timeframe. Main reasons:

1) The boycott itself is stupid. Mackey presented some alternatives to the health reforms being proposed. At least some of those are pretty clearly good ideas regardless of what you think of the current reform proposals. And even if you disagree strongly with the others, it's stupid to lump him in with the nutjobs spewing nonsense about how government's going to ruin Medicare or whatever.

2) The single-issue nature of the boycott ensures that even if it were to gain any short-term traction, it wouldn't last beyond the current health care reform debate. The very most impact this will have is a good buy opportunity a week or two from now.

3) There's already been significant blow-back from somewhat more sophisticated folks realizing how misguided this is. Even the progressive blogging community doesn't give anything resembling widespread support. Both Whole Foods corporately and Mackey individually are remarkably progressive by any standard within corporate America. They treat their employees very well, encourage local agriculture, carry a wide variety of fair trade goods, and so on. Most of the people the boycotters would like to have on "their side" realize that attempting to punish a corporation because a member of their management team made a well-reasoned proposal with which you disagree is, well, stupid.

4) The "online community" aspect has been remarkably overplayed. On Facebook, for example, the "Boycott Whole Foods" group has a bit over 24k members. That might sound like a lot, but keep in mind that, also on Facebook, Whole Foods Market has over 120k "Fans". There's also at least two "don't boycott" groups that've popped up so far.

I don't have a strong prediction on outperform/underperform. TMFEldrehad's point about expansion costs and competition from established "mainline" markets is a good one, and I have some concern over their premium prices in a depressed economy. Still, their brand is very strong and they execute very well at what they're doing. In addition to treating their employees well, the train them much better than perhaps any of their competition, which makes for a very different experience, attracting high-margin consumers who're interested in more than just price and also generating a lot of brand loyalty.