Whole Foods Clones

[hillbill]

A Big Crowd in the Specialty Niche

The success of Whole Foods Market,......., has shown the potential for high-end niche foods. Now, some of New York's home-grown grocery chains are planning to test the market well beyond Manhattan.....

"The success of Whole Foods and Trader Joe's has given excitement to an industry that was traditionally based on one- or two-store ownership," he said. "The industry never had a category-killer like Barnes & Noble or Home Depot before......

Analysts say the profits for high-end groceries can be high. Ms. Aggarwal said Whole Foods' gross margins were 34.5 percent, "and not about to change."

[MarketStEl]

Good news or bad, you ask? After reading the article, I'm not certain I can give a definite answer one way or the other.

If it means people are becoming better educated about good food and willing to pay more attention to what goes on their plates, then it's good news. If this is just another example of merchants catering to the rampant status anxiety among the upper middle class, then I'm not so sure.

One thing I am certain of after reading this, though: The folks in Johnson County, Kan., now definitely have more money than they know how to handle and more ways to dispose of same than when I lived in Kansas City. Though it is touching that Leslie Rudd was fond enough of her hometown to want to share her food finds with it.

[Andrew Fenton]

Why would this phenomenon be bad? Status anxiety will always be with us; and if this manifestation means that I can more easily get good cheese and interesting kinds of vegetables, I'm all for it.

[hillbill]

Why would this phenomenon be bad?  Status anxiety will always be with us; and if this manifestation means that I can more easily get good cheese and interesting kinds of vegetables, I'm all for it.

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The conventional wisdom, I'd imagine, is that the "bad" would be that the gourmet chains will drive out the locals, and that quality will decline while corporate glossiness and blandness reigns (that it's gotta be much more about "catering to the rampant status anxiety among the upper middle class" than about humbly passionate merchants selling the best possible quality to humbly appreciative customers.)

I'm not agreeing with this assesment, I'm just curioius about what more knowledgable people think, that's why I posed the question.

One phenomenon that does seem to be occuring in the grocery market, as is apparently happening throughout our culture, is that the middle is disappearing, and we're left with most of the capitalist money and energy and passion chasing and catering to the wealthy; with Wal-Mart left for the rest of us. This would seem to be bad for our society for numerous reasons. But of course, the Wal-Marts and the Whole Foods are all just exploiting this phemomenon, not creating it.

[Andrew Fenton]

The conventional wisdom, I'd imagine, is that the "bad" would be that the gourmet chains will drive out the locals, and that quality will decline while corporate glossiness and blandness reigns...

This seems unlikely; I'm not likely to shop at the bottom-rung markets if I can avoid them; and I wouldn't buy plastic wrap, for example, at Whole Foods. Unless I really wanted organic plastic wrap imported from Nepal, that is.

[MarketStEl]

The conventional wisdom, I'd imagine, is that the "bad" would be that the gourmet chains will drive out the locals, and that quality will decline while corporate glossiness and blandness reigns...

This seems unlikely; I'm not likely to shop at the bottom-rung markets if I can avoid them; and I wouldn't buy plastic wrap, for example, at Whole Foods. Unless I really wanted organic plastic wrap imported from Nepal, that is.

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But when Wal-Mart undercuts your local Super Fresh (let alone the neighborhood butcher or fishmonger) and Whole Foods skims off the high-end customers who keep all of these afloat, where will you go then for the plastic wrap or basic ground beef?

[MarketStEl]

Why would this phenomenon be bad?  Status anxiety will always be with us; and if this manifestation means that I can more easily get good cheese and interesting kinds of vegetables, I'm all for it.

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I'm not so sure it's bad, either. But I too worry that we may be losing that broad middle where we used to find a whole bunch of things that we had in common as Americans. If I thought that this phenomenon meant a leveling up of tastes and quality of food across society, I wouldn't worry so much, but I suspect it may also be another manifestation of a status symbol, something to set the superior Us above the ignorant Them. And that is where I have problems.

[Andrew Fenton]

But when Wal-Mart undercuts your local Super Fresh (let alone the neighborhood butcher or fishmonger) and Whole Foods skims off the high-end customers who keep all of these afloat, where will you go then for the plastic wrap or basic ground beef?

I'll still go to the local supermarket, because I can walk to it and am too lazy to drive. Also, it's clean, friendly and relatively efficient, unlike the horrifying South Philadelphia Wal-Mart.

Turning to your other point, a random thought: it occurs to me that a good example of blending high, middle and low would be Philadelphia's Italian Market.

[phaelon56]

I'm fortunate enough to have a Wegman's about three miles away but if Whole Foods opened locally I'd probably go there as well. But I'd cherry pick my items and outside of the major metro markets that's what many other people would also be likely to do. In a small market where it's quick and easy to get from one store to another by car and you're already out running errands... people DO "shop the specials", going to several different store to get the promotional or specialty items they need.

Keep your eye on Balducci's for significant growth. Marc Ordan, the Balducci's principal quoted extensively in the article, was the CEO of Fresh Fields and played a key role in their growth before Whole Foods acquired them. He's a very sharp cookie.

[Dani Mc]

Trading Up-The New American Luxury

discusses a lot of the reasons the middle of the consumer market is changing. They draw from several examples in the industry, including Panera, Viking, Kendall Jackson, Whirlpool, and Samuel Adams.

book reviews and summaries here:

http://www.amazon.com/exec/obidos/tg/detai...=books&n=507846

very interesting book, even for those not in marketing or retail. Trader Joe's is discussed, as well as the rise of the 'Fast Casual' Restaurant.

Some of the book is a little obvious, but overall its a fun read.

[MarketStEl]

But when Wal-Mart undercuts your local Super Fresh (let alone the neighborhood butcher or fishmonger) and Whole Foods skims off the high-end customers who keep all of these afloat, where will you go then for the plastic wrap or basic ground beef?

Turning to your other point, a random thought: it occurs to me that a good example of blending high, middle and low would be Philadelphia's Italian Market.

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Reading this, then reading the summaries of "Trading Up: The New American Luxury" on Amazon.com, I understand what you are talking about and how the Italian Market could serve as a model--if we can find the space for it in suburbia (you reading, hillbill)?

For the benefit of the non-Philadelphians on this list, the Ninth Street "Italian" Market is as much a Philadelphia food tradition as the more centrally located Reading Terminal Market, and every bit as famous, as everyone who ever watched the first Rocky movie knows.

The Italian Market, because it is not a single, centrally-managed physical space but a collection of individual structures and curbside stalls, manages to evolve over time, retaining vestiges of its past while adapting to the changing communities it serves. Nowhere else in Philadelphia could you find a shop that stocks live fowl for butchering on the premises and a store that offers Le Creuset , Calphalon and the latest kitchen tools in the same general area. The produce stands that offer huge bargains for shoppers seeking to feed large families or stretch their food stamps have been joined by others that offer high-end vegetables and specialty peppers. The Italian merchants--many still in business (Claudio, Esposito, Giordano, DiBruno...)--that gave the market its name have been joined by Asian fishmongers and Mexican mercados. The same butcher shop that offers 95-cents-a-pound ground beef in 10-pound bags will also sell you a $69 turducken for your Thanksgiving feast, and sure enough, you will find customers from every socioeconomic stratum lined up at its counters.

On Ninth Street, you still encounter the broad cross-section of the city that you won't find at the North Philly Station Pathmark or at the Wegmans in Wayne. Granted, some of the places tend to skew to one end of the class spectrum or the other--even though DiBruno's takes food stamps, you probably won't find too many customers whipping out their Access cards to buy five-year-old aged Gouda or chevre, and on the other hand, you don't find too many of the people walking out of DiBruno's with their cheeses crossing the street to buy seven cucumbers for a dollar at the sidewalk stall; instead, they head to Judy and Stan's or Michael Anastasio's, where the quality is more consistent and higher (as are the prices). But still there is that wonderful mix that defines a good urban space.

[Mimi Sheraton]

What I have always wanted to know is, what do they mean by Whole Foods...certainly not whole steers and lambs...whole loaves of bread?

Whole grains (unrefined and unpolished) only? Nothing is cxut up? or What?

[MarketStEl]

What I have always wanted to know is, what do they mean by Whole Foods...certainly not whole steers and lambs...whole loaves of bread?

Whole grains (unrefined and unpolished) only?  Nothing is cxut up? or What?

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It looks to me like the company means "whole" in the sense of "unadulterated".

From the overview on Whole Foods Market's Web site:

We obtain our products locally and from all over the world, often from small, uniquely dedicated food artisans. We strive to offer the highest quality, least processed, most flavorful and naturally preserved foods. Why? Because food in its purest state—unadulterated by artificial additives, sweeteners, colorings and preservatives—is the best tasting and most nutritious food available.

In other words, no nitrites in the bacon, no polysorbate 80 in the sauces, no sucrose polyester anywhere, and so on.

Though I see on a recent trip past the deli counter that WFM has made at least one concession to popular tastes: there is now process American cheese as well as Tillamook Cheddar, Muenster and Jarlsberg Swiss.

They are not averse to carrying products from the major food manufacturers when those products meet their standards: Tropicana not-from-concentrate orange juice and Philadelphia Brand cream cheese can be found in their dairy case, and the Frito-Lay Naturals line of salty snacks is in their chip aisle. But generally speaking, the brands you will find in a Whole Foods store are not the ones you see advertised on TV or in the newspapers and magazines.

[phaelon56]

I think it's just a clever homonym used for marketing terms. It prompt you to think of the warm and fuzzy stuff (unrefined, natural, organic, unadulterated etc.) when it reality it refers to the "hole" in your pocket that appears after they've relieved you of your $$.

A friend of mine, whose wife insisted on buying everything there whether it made sense or not, suggested that the name resulted from the fact that it costs "a whole lot of money" to shop there.

[Farmer Dave]

I find the convenience factor interesting in these upscale stores ... using Whole Foods as an example- or WalMart as an example- regardless of socio-economic standing both stores supply food that is instantly "available"- be it junk food or mashed potatoes at $8 a quart- people don't feel the need to use up time to prepare good (or bad) food...

The markets are a hope though- you see people buying ingredients- showing the intention to actually prepare them- not just heating them up and moving on.

Using those Whole Food mashed potatoes as the example: being in the odd position of making my living by growing produce and also cooking in restaurants gives me the perspective of selling someone the potato.....and if they are interested, going through the steps to make a really good mash......and 9 times out of ten, as they listen to the drill of the hot starchy potato with the ricer or food mill and the warm cream and the spooning around and then the cold butter to finish - they interrupt and ask if I could do all that for them and have them done for them the next week to pick up......"who's got the time"? they say...

Maybe thats how you get a 35% profit margin.

[MGLloyd]

A friend of mine, whose wife insisted on buying everything there whether it made sense or not, suggested that the name resulted from the fact that it costs "a whole lot of money" to shop there.

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Here in the Seattle area, we now have two Whole Foods stores: one in north Seattle and the other in Bellevue. We fondly refer to them as 'Whole Paycheck'.

[MarketStEl]

I think it's just a clever homonym used for marketing terms. It prompt you to think of the warm and fuzzy stuff (unrefined, natural, organic, unadulterated etc.) when it reality it refers to the "hole" in your pocket that appears after they've relieved you of your $$. 

A friend of mine, whose wife insisted on buying everything there whether it made sense or not, suggested that the name resulted from the fact that it costs "a whole lot of money" to shop there.

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Well, that is the reason the chain is commonly referred to as "Whole Paycheck."

[fredbram]

The conventional wisdom, I'd imagine, is that the "bad" would be that the gourmet chains will drive out the locals, and that quality will decline while corporate glossiness and blandness reigns (that it's gotta be much more about "catering to the rampant status anxiety among the upper middle class" than about humbly passionate merchants selling the best possible quality to humbly appreciative customers.)

The areas of the country who have local markets or stores that sell most of the products that Whole Foods sells should worry about the locals being driven out. In Denver, however, we don't have a history of markets like the one in Philadelphia that is mentioned or Pikes market in Seattle etc, so there is a hole in the market that Whole Foods is addressing, and not many others are. We do have some small local cheese shops and independent "gourmet" grocery stores that address it also, but Whole Foods doesn't have much competition here. Not much competition for the high end ingredient dollar, although there is healthy competition for the natural, clean, unadulterated ingredient consumer.

[MarketStEl]

[The areas of the country who have local markets or stores that sell most of the products that Whole Foods sells should worry about the locals being driven out. In Denver, however, we don't have a history of markets like the one in Philadelphia that is mentioned or Pikes market in Seattle etc, so there is a hole in the market that Whole Foods is addressing, and not many others are. We do have some small local cheese shops and independent "gourmet" grocery stores that address it also, but Whole Foods doesn't have much competition here. Not much competition for the high end ingredient dollar, although there is healthy competition for the natural, clean, unadulterated ingredient consumer.

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Actually, if Philadelphia can serve as any guide, the really good, passionate local merchants need not worry, assuming they are in a large enough city.

While I understand that the merchants love to gripe about the rent structure, business at the Reading Terminal Market is as good as it's ever been, backed by a strong marketing campaign and an inviting Web site. As the ads on the back of the buses say, it is "Still the most super market in Philadelphia." And that is with Fresh Fields/Whole Foods Market as a competitor for more than a decade.

The Italian Market does not benefit from the sort of coordinated marketing that the centrally managed RTM does, and I have noticed that the number of merchants and the extent of the market's core have shrunk (along with the population of the neighborhoods immediately surrounding it) over the past two decades. But--as I believe I have noted elsewhere--new immigrants have brought new life and a changing mix of businesses to the Italian Market, a sure sign of continued vitality. It also helps that the Italian Market has something of a corner on a niche market--that for large amounts of cheap produce, a category where WFM will never compete head-to-head.

I think that two things are key:

--An educated public that understands and appreciates the value of locally produced food, with all its seasonal variations, and

--a rich local supply of fresh foods, such as can be found in the countryside of southeastern and south-central Pennsylvania, southern New Jersey and lower Delaware.

Denver is situated where the Wheat Belt meets the Rockies. If I'm not mistaken, most of the agriculture of eastern Colorado is geared towards producing staple grains--the climate is not that conducive to producing vegetables, and there are no significant bodies of water to speak of anywhere near the place. That, IMO, may account for the lack of a thriving farmers'/public market in Denver. Please correct me if my understanding of Colorado agriculture and climate is mistaken.

Edited December 6, 2004 by MarketStEl (log)

[EdS]

I visit Whole Foods only to buy grains. I like all those bins. There seems to be a good turnover, and the prices for those products seem fair.

While I'm waiting in line, I like to look in other people's shopping carts. What do I see? I see a lot of hippy-brand junk food. It's mostly similar crap to what people buy in a regular grocery store but different brands and at higher prices. OK, maybe there's an organic foie-gras-fed and plucked-by-virgins chicken but then there's loads of potato chips, frozen prepared stuff, and more.

I think most people shop at places like Whole Foods for the image and perhaps for the delusion that they are eating healthy.

[Margo]

I think that two things are key:

--An educated public that understands and appreciates the value of locally produced food, with all its seasonal variations, and

--a rich local supply of fresh foods, such as can be found in the countryside of southeastern and south-central Pennsylvania, southern New Jersey and lower Delaware.

Denver is situated where the Wheat Belt meets the Rockies. If I'm not mistaken, most of the agriculture of eastern Colorado is geared towards producing staple grains--the climate is not that conducive to producing vegetables, and there are no significant bodies of water to speak of anywhere near the place. That, IMO, may account for the lack of a thriving farmers'/public market in Denver. Please correct me if my understanding of Colorado agriculture and climate is mistaken.

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