Retail Memo: Whole Foods to Planet Organic: The Pie is Big Enough For Both of US

Austin, Texas-based Whole Foods Market, Inc. was accused by everyone from the U.S. Federal Trade Commission (FTC) and consumer groups, to various independent natural foods retailers and certain suppliers, of trying to create a supernatural foods retailing monopoly with its acquisition of Wild Oats Markets in the U.S. in September, 2007.

However, in Canada Whole Foods is holding out an olive branch to home-grown, Alberta-based natural products retailer Planet Organic Market.

Yesterday afternoon on Canada's Business News Network (BNN), Peter Hilge, head of Whole Foods' Ontario regional division, said the natural and organic products pie in Canada is big enough for both giant ($6 billion annual sales) Whole Foods Market, and smaller (about $100 million annual sales) Planet Organic Market, to share.

Hilge, who appeared on the program with Planet Organic Market CFO Darren Krissie, said he believes with organic category sales growing by 20% a year in Canada, along with the fact Whole Foods' stores in the country are much larger than Planet Organic Market stores, he sees no reason for the two natural products retailers to have a "knock-down, drag-out" fight over market share.

"I think there is more than enough pie that we can share," Hilge answered when the host on the popular business network afternoon program asked him if there was going to be a battle between the two natural and organic product retailers in Canada. Hilge added that such a fight "would be nonsensical,"

Krissie seemed to like the fact that Hilge stated more than once that it isn't the much larger retailer's goal to grab market share away from home-grown, Alberta-based Planet Organic. That might be the unintended consequence of Whole Foods' store expansion program in Canada however.

Whole Foods Market currently has six stores in Canada; four in Vancouver and two in Ontario. Three of the four Vancouver-area stores are operated under the Capers banner. One of the Ontario stores is in Toronto and the other is in Oakville. The supernatural grocer has plans to build more stores in Canada, especially in Ontario where it currently has only the two units. A new store in Vancouver is almost finished and set to open soon.

Planet Organic Market also operates six stores in Canada. The stores are much smaller, and far less comprehensive in product selection, than Whole Foods' Canada stores.

They also are more "health food" oriented in contrast to Whole Food's superstores, which not only feature extensive selections of natural and organic groceries, but specialty and gourmet foods, whole health and body sections, in-store dining and prepared foods-to-go offerings, huge fresh produce, meat and seafood departments, and other in-store specialty departments like wine cellers and craft beer sections.

Planet Organic Market, like Whole Foods Market, Inc., is publicly traded. However, it's market capitalization is a mere fraction of Whole Foods'.

The 25 year old Planet Organic is the home town Canadian retailer though. And it's also on a growth spurt. Canadian consumers appreciate the local angle, even though they also seem to be enjoying shopping at Whole Foods' natural and organic products retail emporiums.

Since Whole Foods Market, Inc. only has six stores in Canada, and Planet Organic and Whole Foods' stores don't currently go head-to-head in any neighborhoods to speak of, the extension of the olive branch should be real for sometime as well as figurative.

That will likely change as both chains add additional stores throughout Canada. Or--and we are just thinking out loud here--might a merger be in the future for the two retailers?

Is Planet Organic Market possibly the future Wild Oats of Canada from a merger and acquisitions standpoint? We don't have any scoops in that regard. We're just merely thinking that olive branches can often be good first entrees (or dates), and can often lead to more extended relationships.

You can view the BNN program interview featuring Whole Foods Canada's Hilge and Planet Organic Markets' Krissie at the link here.