Last Updated Sep 1, 2010 2:25 AM EDT
The grocery that taught much of America to eat organic is still growing in the recession, too, despite the chain's pricey "Whole Paycheck" reputation.
How'd they do it? Here's five reasons why Whole Foods came out on top:
- Changing with the times. Whole Foods started out in organic food, but kept evolving with its shoppers. In the go-go years, it morphed into an upscale, gourmet-food palace known more for delicious than for healthy. Then, when the economy swooned over the past two years, the company dug back into its organic roots and shrunk its store size to keep expenses down. Its concept is flexible enough to shift with consumers' tastes -- if it wasn't, it might be dead and buried now.
- Aggressive purchasing. Of other companies, that is. Whole Foods' CEO John Mackey saw early on that the sector would grow up to have one category-killing national chain, and made sure Whole Foods was out in front, snapping up great regional players from Mrs. Gooch's to Bread & Circus. Finally, its acquisition of Wild Oats -- though costly due to federal anti-trust scrutiny -- co-opted its only real contender for the top slot and assured its place.
- Moving the bar. Whole Foods doesn't coast on its organic cred. Instead, it stays ahead of the competition by continually redefining what an organic/healthy store should offer customers. Recently, its transparency about food ingredients compared with arch-competitor Trader Joe's secrecy won it points. Coming up next: full disclosure on all seafood the chain sells, and a new "animal welfare" rating system to help customers evaluate the meats they buy.
- Separation of brand and CEO. In the past year, Mackey has shot off his mouth on a number of controversial topics, from opposing Obama's healthcare reform to publicly stating his disbelief in global warming. Despite media uproar, it doesn't seem to have hit the chain's sales volume. That's because, as Mackey proudly points out, he is not Whole Foods. The company has built a team culture that's grown a lot of leaders, and customers have so many positive personal in-store experiences with the brand as a result that they just focus on the great food. If the CEO's a little weird, well, we are talking the yoga-meditation-feng shui set. Probably many customers don't feel in a position to throw stones here.
- More than great food. Ultimately, this chain triumphed because it didn't just provide customers with wholesome, delicious food, it became a torchbearer for their lifestyle. In the process, Whole Foods changed American culture and made interest in where food comes from mainstream. Like all great chains, they're more than a store to their loyal customers, they're a place that validates their life choices. Currently, the company is testing wellness clubs designed to help customers lose weight. That may not work, but it shows how Whole Foods continues to think about how it can forge closer connections with customers.