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March 9, 2005


Whole Foods reaches new level of posh indulgence+

If one sign of a society in decline is outrageous and overbearing decadence, then the new Whole Foods grocery store in Austin, Texas is a bad sign for the future of America. Here are some of the features at the new 80,000 square foot store:

  • 14 pastry chefs making custom orders
  • a seafood counter with staff people throwing fish around, a la Pike Place Market in Seattle
  • an on-site playground
  • an on-site massage therapist
  • an all-organic clothing section with dressing rooms
  • a walk-in beer cooler with 800 varieties
  • and a flowing fountain of chocolate

This new, manic apotheosis of yuppie excess might be all a little overwhelming for the shopper who maybe just wants to buy some milk and a newspaper. Whole Foods' all-organic policy for the products they sell also seems to serve as psychological forgiveness for customers who spend wads of money on overpriced luxury foods. "Whole Foods offers a psychological absolution of our excesses," says Jerald Jellison, psychology professor at University of Southern California. "After filling your cart with sinful wine, beer, cheese and breads, you rationalize it's healthy, so that cancels out the negatives."

I find the defensiveness of Whole Foods' senior staff a little unnerving, too. "We're not Holy Foods," explains co-President Walter Robb, "We're Whole Foods." "We're not a religion. We're not a cult," company founder John Mackey says. I wish one of these guys had said, "We're not an emblem of overindulgence and hyper-consumerism whose large profits* are made by getting wannabe-yuppies to overspend on fashionable groceries that are not really that different from what you can get at Safeway," but I don't think they're that cavalier.

Also, for all their self-righteous goody-goody posturing, Whole Foods are a bunch of union-busters. More on this shortly from Emily. - Amy

Whole Foods has built a wildly successful business model by going in the exact opposite direction from Wal-Mart. While Wal-Mart essentially forced the supermarket workers' strike in California by undercutting those chains' prices, Whole Foods appeals to the bright-eyed liberals who would never dream of crossing a picket line - even if it means paying twice as much for a quart of milk. Whole Foods doesn't sell organic produce; they sell a lifestyle. In this terrific Fortune article about the manifest destiny of Whole Foods, founder Mackey is right on target when he defines his shoppers as people who "want to make a statement about who they are by where they shop."

But the company does share some alarming similarities with Wal-Mart. They've branched out their product line to ensure that even if you're just coming in for organic asparagus, well, you might as well grab your coffee and cereal and some toilet bowl cleaner too. The average size of a Whole Foods store is now 35,000 square feet; they own many of their distributors (such as a fish supplier in Mass.); and they sure hate unions. In fact, Mackey not only calls unions "highly unethical and self-interested," he also compares them to herpes: "It doesn't kill you, but it's unpleasant and inconvenient and it stops a lot of people from becoming your lover." That sure is a good attitude to have if you're planning on yearly revenues over $10 billion by 2010!

People - I'm sorry to tell you this, but even Ben & Jerry sold out to Unilever. No money-making corporations are really out there to serve the greater good. Businesses are businesses, and the community benefits, smiling employees, and free playgrounds are just pleasant side effects. Does that mean Whole Foods doesn't have delicious lime-marinated tofu? Of course not! But buying it doesn't make you a better person, and don't be fooled into thinking it does.

I'm particularly interested to see how Whole Foods' New York City stores do in the next few years. So far, the company has only opened stores in areas relatively underserved by grocery chains. This spring, a store will open up across the street from the bustling Union Square farmers market. Will customers choose pricey packaged organic foods over buying the same goods cheaper, and straight from the source? Whole Foods is also planning to build a Brooklyn store in the next few years, in a community that has not only an active farmers market, but the nation's largest food co-op (and easily the most fanatical co-op member base.)

I also might add, even though folks are lining up at the 14-man pastry station, it may not be the best time to invest in Whole Foods. New accounting regulations will require the company to deduct the stock options it loves to give "team members" as compensation from earnings. The answer? Start limiting employee stock options, which will also limit employee compensation. Mackey calls the rules "stupid" and claims that the company is growing so fast that investors won't even notice, but that remains to be seen. - Emily

* a typical supermarket sells south of $400 per square foot; a Whole Foods store exceeds $800

categories: Business, Culture
posted by amy at 1:01 PM | #

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