Whole Foods Market Digs In

Finally receiving competition, the healthy foods pioneer is rallying to retain its standing in a $35 billion industry.

“No occupation is so delightful to me as the culture of the earth, and no culture comparable to that of the garden.”

– Thomas Jefferson

Jefferson was one of America’s first organic gardeners. He believed that a healthy garden started from the ground up, and he regularly added organic matter to his soil. He also thoroughly enjoyed his organic fruits and vegetables.

The organic food industry has been growing strong in the United States, with increasing awareness regarding health, environment protection, food safety, and animal welfare reforms. The U.S. Department of Agriculture’s National Organic Program is credited with helping create an organic industry that includes 17,000 organic businesses with an estimated $35 billion in retail sales.

“There is a growing trend in today’s society to try to get back to nature,” says Commissioner Mike Strain with the Louisiana Department of Agriculture and Forestry. “Many people feel eating organically will help achieve a return to a more natural state for them and their families. Generally speaking, if you buy local, organically grown products, you’re buying fresh and regional products. Each and every day, we must embrace all types of agriculture to expand the production of safe and affordable food to meet the demands of a growing population. Organic foods represent one of those sectors.”

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Leading the organic food industry is Whole Foods Market Inc. Its reputation as a store where shoppers can buy items without the pesticides and additives that are frequently present in “regular” food, has made it into one of the country’s largest publicly traded food and drug companies. It ranks 218 on the Fortune 500 list, with a market value of almost $19 million and an annual revenue in 2013 of $12.9 million.

Whole Foods was founded in 1980 in Austin, Texas, when four local businesspeople, John Mackey, Renee Lawson Hardy, Craig Weller and Mark Skiles, decided the natural foods industry was ready for a supermarket format. It started in a 10,500-square-foot space with a staff of only 19 people.

Whole Foods now operates 399 stores in the United States, Canada, and the United Kingdom and employs 85,000 team members. The company plans to add another 40 or so stores as part of its aggressive growth strategy.

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Competitors

Today, however, health-conscious shoppers have many more options to find their natural and organic foods. Kroger, one of the country’s largest supermarket chains, has recently seen its stock soar in large part because of its fastest-growing department – natural foods. The supermarket chain is expected to surpass Whole Foods within two years and become the nation’s top seller of organic and natural food, according to a recent JPMorgan report. Even Wal-Mart has begun a major program to expand into organic foods. In addition, stores such as locally owned Rouses are also becoming worthy competitors.

“Over the last few years, we have seen our organic growth skyrocket,” says Patrick Morris, produce buyer for Rouses Supermarkets. “We carry an extensive variety of quality organics, and we offer them at a great value. The organics section has become a destination at our stores. We are the local company, so we live and breathe it every day. Being successful with ‘local’ means having a trusting partnership with the farmer, where both parties can benefit. We get out in the fields daily with the farmers to help cultivate that relationship.”

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All this competition has had a direct impact on Whole Foods’ bottom line. The company remains highly profitable, but recently it’s seen its same-store, year-over-year sales growth slide. The company missed its earnings targets for three quarters, and this spring it experienced a 19 percent plunge in its stock price.

So it may come as no surprise that Whole Foods, which for many years eschewed national marketing, has recently entered the advertising fray.

 

New Marketing Campaign

For the first time in the company’s nearly 35-year history, Whole Foods is doing more than word-of-mouth and community relations as a way to build its brand. Late in October, the company launched a $15 million national marketing campaign using the theme “Values Matter” in television, print and digital advertisements. The campaign was created by Partners & Spade, a New York-based advertising agency, and is guided by Whole Foods’ new global vice president of marketing and communication, Jeannine D’Addario.

“We are leaders and pioneers in this industry,” D’Addario says. “And as we seek to introduce our brand to new customers, it’s important for us to talk about who we are and what we offer. This campaign will distinguish what makes our brand special, our food different and our quality superior. It’s our opportunity to reaffirm our unwavering commitments to our core values, which are at the heart of our brand.”

 

Ads

The TV ads are luminous, reverent and highly cinematic. Emmy Award-winning commercial filmmaker Gerard de Thame directed them, and the Austin-based full-service advertising agency GSD&M is handling media strategy, which includes running spots during many prime-time television shows. Ads will also appear in business, food, health and lifestyle outlets, both print and digital.

 

“Whole Paycheck”

It remains to be seen whether the ads will combat the company’s reputation for being a high-priced, out-of-reach grocery with the nickname “Whole Paycheck,” but D’Addario believes the company is making a difference on that front, too.

“We’ve worked really hard over the last few years to move away from a high-price perception,” D’Addario says. “We don’t consider ourselves as a luxury brand or a bargain brand. We cater to all demographics. For example, if you want to eat healthy on $5 a day at Whole Foods Market, you certainly can.”

 

Attracting New Customers

The company has also made several other steps to attract and keep customers. Whole Foods Market will be one of the first retailers to accept Apple Pay, Apple’s new mobile payment system. The company is also creating its first customer-loyalty rewards program, catching up with what has become a standard among many grocers.

 

Community-Based Marketing

Prior to its new advertising campaign, Whole Foods relied on community-based marketing. It passionately supports neighborhood events and donates 5 percent of after-tax profits to a variety of nonprofit organizations. In Louisiana, in fiscal year 2014 alone, Whole Foods gave more than $82,700 to a variety of nonprofits, including Hollygrove Market and Farm and Keep Baton Rouge Beautiful.

“We received much-needed funds for our Emergency Response Team,” says Evan Marie with the Louisiana Bucket Brigade, which helps communities that neighbor the state’s oil refineries and chemical plants. “Whole Foods’ contribution directly supports residents working to protect their communities.”

 

EARLY NEW ORLEANS TIES

The Whole Food Co. opened its doors in New Orleans in October 1974 on Cohn Street in a 1,100-square-foot space. By 1978, the tiny store was doing more than $1 million of business per year – its success fueled by a committed staff and a very loyal customer base.

“Going into the store on Cohn Street always felt like going home,” says Diane Black, a local resident who often visited the store. “It was so cozy and full of the aroma of life.”

In 1981, Whole Food Co. opened a larger store on Esplanade Avenue. The store anchored the growth of Faubourg St. John, now one of the city’s most sought-after neighborhoods.

In May 1988, Whole Foods Market acquired Whole Food Co., and the Esplanade store became the company’s sixth store and its first foray out of Texas.

“It was awesome having Whole Foods in the neighborhood,” says Karen Terranova, owner of Terranova’s Supermarket, which has been in business on Esplanade Avenue since 1925. “It brought plenty of people looking for different things, and it enhanced our business for sure. Their employees patronized our store, coming over to buy their Cokes and snacks.”

 

Stores

All Whole Foods stores offer many of the same things, but there is a real push to offer food that is local to each store. The company employs local foragers whose sole responsibility is to increase local suppliers. Each store also tries to have a unique look with its own flavor, charm and community events. There are currently six stores in Louisiana (see sidebar).

A view of four of the five Whole Foods Markets currently operating in Louisiana. Arabella Station on Magazine St. in New Orleans, Lafayette, Baton Rouge and Metairie.

 

Broad Street and The ReFresh Project

Whole Foods Market’s Broad Street store, which opened Feb. 4, 2014, anchors the ReFresh Project, a 60,000-square-foot development that aims to stimulate growth in New Orleans’ Broad Street commercial corridor and to improve access to fresh, high-quality food and health-related programs in the community. The site houses Liberty’s Kitchen’s full-service café and commercial kitchen, Tulane University’s Goldring Center for Culinary Medicine, and offices for FirstLine Schools, Broad Community Connections and Boys Town Louisiana.

The project was developed by Broad Community Connections, a local nonprofit focused on revitalizing the area, and L+M Development Partners, a New York-based firm that specializes in low-income and market-rate housing.

 

Employees

Whole Foods Market has been ranked as one of the “100 Best Companies to Work For” in America by FORTUNE magazine for 17 consecutive years. The company’s lowest earners average $13.15 an hour, in addition to benefits such as health care. No executive makes more than 14 times the employee average.

“The energy and passion of our team members creates an electric atmosphere,” says Dwayne Shelton, Baton Rouge store team leader. “They are our biggest asset, and we deliver the ultimate shopping experience through tastes, smells, service and product knowledge.”

 

Into the Future

“Organic agriculture is one of the fastest-growing segments of American agriculture and helps farmers receive a higher price for their product as they strive to meet growing consumer demand,” says Secretary of Agriculture Tom Vilsack at a recent policy conference in Washington, D.C.

As the industry booms, Whole Foods is continuing its expansion throughout the world. Part of the company’s strategy is to open stores in underserved areas, smaller markets and so-called “food deserts” where finding fresh fruit and vegetables can be challenging.

“Next year in the Whole Foods Market Southwest Region – which encompasses Louisiana, Texas, Oklahoma and Arkansas – we’re currently slated to open seven stores, including the Shreveport location in the fall,” says Kristina Bradford, Louisiana community and media relations coordinator. “We have a team who continuously scouts locations throughout the United States to find the best opportunities for Whole Foods Market to put down roots and open a store.”  

 

The company has a strong focus on local products. The Broad Street location currently sells more than 330 locally made products.

 

Fast Facts – WFM

• founded in 1980 in Austin, Texas

• ranked 214 on Fortune magazine’s Fortune 500 list

• annual revenue in 2013 approached $13 billion

• the purchase of New Orleans local supermarket The Whole Food Co. in 1988 was the company’s first expansion outside of Texas.

• currently there are 399 stores in the U.S., Canada and the U.K.

• gave $82,700 in 2014 to a variety of local nonprofits in Louisiana.


Whole Foods Market Throughout Louisiana

New Orleans
Arabella Station
5600 Magazine St.
Opened Dec. 4, 2002
60,000 sq. ft. | 235 team members
 housed in an old streetcar barn built in 1893, which sits on bustling Magazine Street.


Broad Street
300 N. Broad St.
Opened Feb. 4, 2014
25,000 sq. ft. | 150 team members
  anchors the ReFresh Project, a 60,000-square-foot development that aims to stimulate growth in New Orleans’ Broad Street commercial corridor and to improve access to fresh, high-quality food and health-related programs in the community.
  sells more than 330 local products.


Metairie Veterans
3420 Veterans Memorial Blvd.
Opened May 18, 2005
52,246 sq. ft. | 301 team members
  features a cooking demonstration station and two sit-down dining venues.


Baton Rouge
7529 Corporate Blvd.
Opened July 20, 2005
50,635 sq. ft. | 300 team members
  active community room with a professional kitchen for instruction.
  certified cheese professional on staff.


Lafayette
4247 Ambassador Caffery Pkwy.
Opened Sept. 24, 2014
36,200 sq. ft. | 150 team members
  more than 100 local suppliers and 300 local products.
  beer and wine bar with 16 beers on tap (em-phasis on local beers) and three wines on tap
  built green from the ground up
  espresso machines built in Florence, Italy


COMING SOON – Shreveport

Near the intersection of East 70th Street and Fern Avenue
Slated to open fall 2015
Approximately 36,200 sq. ft.
Will have approximately 140 team members
  coffee house, fresh juice bar, a pecan-smoking pit and indoor and outdoor seating areas.

  wood used in designing the store will be harvested from local trees such as cedar and cypress
  self-serve pizza oven

 

 

 

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