BIG APPLE DEBUT

CHRISTINA VEIDERS / Additional reporting: Laura Klepacki / Stephanie Loughran

NEW YORK -- Whole Foods Market has taken Manhattan with its distinctive whole-health retail philosophy.

The Austin,Texas-based natural food chain opened its flagship property here in the Chelsea district between 24th and 25th streets on Seventh Avenue, Feb. 15. The traditional 35,000-square-foot Whole Foods Market and the new 3,000-square-foot Whole Body store -- a stand-alone store with a separate entrance -- received good media reviews on opening day and has since been doing brisk business, SN observed on several store visits over the last few weeks.

During the same week of its Manhattan debut, the company released its first quarter financial results, which fell below previous projections due to rising utility costs and a disappointing holiday season.

Whole Foods executives declined an interview with SN on their positioning and expectations in the Big Apple's competitive and high-rent retail environment. This is a market where the Whole Body store will go up against the likes of The Body Shop, H20 Plus, General Nutrition Centers and several major chain drug stores -- CVS, Rite Aid and Duane Reade.

However, with its positioning on natural health the Whole Foods proposition is unique to Manhattan. On a one-stop corner, shoppers can get a broad spectrum of natural and health-oriented foods, beauty care and nutritional supplements all presented in a clean and pleasant shopping environment that offers plenty of helpful service and information. "Whole Foods will do very well. It redefines what a supermarket is supposed to look like for Manhattanites," said Yudi Bahl, an analyst with U.S. Bancorp Piper Jaffray, Minneapolis.

"It has opened a store that offers a distinctive choice. Whole Foods strives to make it visually appealing and easy to shop with competitive prices, great merchandise and service. Chelsea is a good neighborhood demographically," noted Bahl.

As far as Whole Body's success, analysts were somewhat skeptical. "It's hard to think that someone will do better than some like The Body Shop. Whole Body is less clear and not a big venture. I am less optimistic [for its success] than Whole Foods Market," commented Mark Husson, analyst with Merrill Lynch, New York.

A spokeswoman for the company said the chain hadn't intended to create a stand-alone beauty store -- but adjacent real estate opened up and Whole Foods seized the opportunity to separate out that piece of the business and expand offerings.

"It gave us a chance to create the boutique feel and showcase our Whole Body concept," Laurie Rocke, Whole Foods Market coordinator, told Fairchild's Women's Wear Daily (SN is also a Fairchild Publication). In Whole Foods' other stores, Whole Body refers to its store-within-a-store health and beauty departments.

Shoppers in the Chelsea neighborhood have already been primed for beauty brands touting wholesomeness. A block away is Organic Market, a corner grocery that devotes about a quarter of its footage to herbs, minerals and natural beauty brands, such as Ecco Bella, Burt's Bees, Tom's of Maine and Naturtint, a hair color collection.

But the new Whole Body, with its wooden fixtures and soft lighting, is expected to bring a more sophisticated shopping environment to the neighborhood. And Rocke said the store's mix of vitamins, supplements, body care and cosmetics will offer Manhattanites a one-stop shopping alternative. "You won't have to run from your vitamin store to Aveda," said Rocke.

Whole Foods didn't miss an opportunity to make the connection between food and natural beauty care at the Whole Body checkout counter. Displayed at the front end were side-by-side comparisons of beauty care products and food. For example, milk body lotion was merchandised next to Parmalat milk; key lime shampoos buttressed against limes; apple vinegar shampoos positioned next to Heinz apple cider vinegar; honey lotion next to jars of honey, etc.

Trained specialists are on hand to provide helpful product information. There is also an Internet kiosk for shoppers to use like a library. Web sites of brands carried are bookmarked for easy access.

Allyn Jones, Whole Body coordinator, said Whole Body is "where health meets beauty. It is about taking care of your body from the inside out."

Unlike most supermarkets, which offer minimal selection, Whole Foods presents an eclectic assortment including Dr. Hauschka, Annmarie Borlind, Shi-Kai, Desert Essence, Giovanni Natural Hair Care, Essential Oil Products, Zia Natural Skincare and Demeter Fragrances, along with more widely available labels like Burt's Bees, Kiss My Face and Tom's of Maine. Item prices can range from as low as $1.99 for a body gel to $30 for a skin cream. To start, there will be four cosmetics brands. Private label under the Whole Foods umbrella is also an important part of the mix and will be expanded with a men's toiletries collection in the spring and children's body care items this summer.