Viewpoints

Bracing For Whole Foods’ U.S. Expansion Plans

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Twenty three years.

That’s roughly how long it could take Whole Foods Market to reach its goal of 1,000 U.S. stores at its present, record expansion pace.

More than 20 years is a long time, and a lot of things can change, but the natural foods giant is confident it will get to 1,000 units (it currently operates slightly more than 300 U.S. outlets). It plans 24 to 27 new units in 2012 and 27 to 32 in fiscal 2013. It’s CEO recently stated, “We are not yet saturated in any major metropolitan market.” Much of this expansion would take place in smaller, secondary markets.

Moreover, an upcoming cover story in SN Whole Health, a supplement to SN, will focus on future expansion by another tier of wellness retailers that includes Sprouts Farmers Market, Sunflower Farmers Market, The Fresh Market, and Earth Fare, noted Bob Vosburgh, editor of WH and a group editor of SN. In the face of this coming natural food onslaught, what are some good strategies for retailers to compete?

Some answers came from the trade publication Natural Foods Merchandiser, which is part of the same parent company as SN. NFM recently polled a few experts on how natural food stores can react to Whole Foods’ expansion. These responses should be of interest to supermarkets as well, given their ongoing competition with Whole Foods. One natural food retailer said the key is to play up points of differentiation with Whole Foods. This retailer even changed its name and logo to emphasize its vegetarian focus and local roots, and took advantage of the media publicity surrounding Whole Foods’ arrival to play up its own distinction.

An independent business specialist told NFM that smaller natural food retailers need to create personal relationships with local producers, including farmers and ranchers, because chains like Whole Foods are increasingly doing the same.

A consultant, meanwhile, advised retailers to focus on competitive pricing when battling Whole Foods, which still has a reputation for being expensive.

I would add a few other points to the comments of these experts.

First, competitive pricing requires keeping costs in line, something Whole Foods is actually now doing better. Second, retailers should target Baby Boomers, which is a strong-suit of Whole Foods, but also Generation Xers, because Whole Foods has been less successful with growing this segment.

Finally, start the whole process before a competitor like Whole Foods comes to town, because having a head start could make all the difference.

Discuss this Blog Entry 3

Old Hippie (not verified)
on Jan 18, 2012

It's curious that WF has only 15 stores in Texas, with a population of 25 million, but 22 in Colorado, with a population of only 5 million. Clearly, WF knows it is less populare in some areas than others. 1,000 stores? Not unless they fundamentally change who they are.

Anonymous (not verified)
on Feb 13, 2012

WF has a higher number of stores in Colorado due to their acquistion of Wild Oats a few years back which was a Colorado based chain.

Kellee Harris (not verified)
on Jan 20, 2012

From a supplier perspective, we love-love-love working with Whole Foods. They are open minded, creative, and accessible. From a consumer standpoint, it is refreshing to shop there because it is obvious their people love their job. As my college-age daughter on a limited budget told me recently when asked why she shopped at Whole Foods, she said in reply, "Because it's fun, and the people working there are cool."

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David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Carol Angrisani

Carol Angrisani is an associate editor at Supermarket News. Along with covering the packaged goods beat, she also manages SN’s annual private-label and ethnic marketing supplements. Carol...
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