While Whole Foods Market intends to retain marketing flexibility at the operating level, it contemplates moving more backstage decisions to its home base in Austin, Texas, co-CEO Walter E. Robb told the UBS Global Consumer Conference Wednesday in New York.
“You need to be global in your brand, your standards, your values and your financial disciplines, and you have to hold that sort of framework while putting the operating flexibility where the action is — where the customer is — and I think we’ll continue to do that,” he explained.
“But we’re gradually looking at moving more of the back side of things that support the business to Austin because it doesn’t make sense doing [the same things] 12 times. It just makes sense [to centralize some functions], and that’s where we expect to pick up some efficiencies.
“And frankly the operators are happy to let some of those things go.”
Robb also said the natural products industry “is becoming the food industry. It’s an incredibly vital, growing industry, and I think you are seeing a tremendous period of transition — with more players in the marketplace and more products becoming available in more places — and you’re going to see some business models that are checked and stressed and tested during this period. But I can promise you Whole Foods will be there at the end of the race.”
He said he does not believe conventional retailers who are adding more space for natural products are taking share away from Whole Foods. “I think they are taking share from each other,” he noted. “But we are not them, and they are not us. We are different from them, and over time that will continue to become clear. As customers say they want more of these sorts of choices, we’re going to be there to serve them.”
Robb mentioned two initiatives that will help distinguish Whole Foods from its competition: “Customers have never had any view into the use of pesticides on conventional produce, and we’re going to provide that for them for the first time ever. And we also plan an effort around transparency on GMO labeling.”
Among other comments:
• With a goal of 1,200 U.S. stores, Robb said Whole Foods expects to reach its first threshold — more than 500 stores — by 2017, “and then we’ll go from there.” With more than 370 stores in operation, Whole Foods has 107 additional leases already signed, he noted.
• Robb said the disruption in the industry created by the Albertsons-Safeway merger “is going to provide opportunities for any retailer with a strong balance sheet and an appetite for picking up real estate, and I think we’ll be a potential beneficiary if there is some divestiture.”
• Private-label brands account for 20% of grocery penetration at Whole Foods, “and while I can see that moving up a little bit, I don’t ever see us moving, like some European retailers, to 60% to 70% penetration,” Robb said.
• Locally grown food is the biggest trend in food today, Robb said — even greater than organic, he noted, indicating that Whole Foods has a local loan program totaling $25 million that it makes available to producers — “and no other supermarket does that,” he noted — “and that part of our business is robust and growing.”
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