Sunday, December 28, 2008

Retail Memo: Web Site and Blog-Driven Viral Boycott of Whole Foods Market Stores in Portland, Oregon Region Going On; Could it Intensify?

The Portland, Oregon USA region offers lots of fresh air, green grass, public transportation and one of the highest per-capita natural foods shopping consumer population segments in the United States. Portland-area consumers love -- and buy -- natural and organic. Portland is a key market for any natural products retailer, and Portland market region consumers are people those retailers want (and need) on their side.

An informal, primarily Web site and Blog-driven, viral boycott of Whole Foods Market stores in the Portland, Oregon USA region is being conducted by an intere,sting decentralized collection of consumers -- political progressives, libertarian types, local business advocates, and others who just plain dislike Whole Foods' issuing of a subpoena earlier this year to Portland-based New Seasons Market.

The subpoena, which also was issued to 92 other natural foods retailers throughout the U.S., demands that the local, nine-store natural foods grocer turn over its sales and financial information, strategic marketing plan (including plans to open new stores), e-mails and other proprietary information to Whole Foods Market, Inc.'s legal council as part of the Austin, Texas-based natural grocery chain's battle against the U.S. Federal Trade Commission's attempt to overturn its friendly acquisition last year of Wild Oats Market, Inc.

As we've reported, Whole Foods Market, Inc. issued subpoenas to 93 natural products retailers in the U.S., including Portland's New Seasons Market. The subpoenas demand the information detailed above from the retailers because Whole Foods' says it must have the data to fight the FTC's legal claim that a combined Whole Foods-Wild Oats is a monopoly in what the regulator calls the "Premium Natural and Organic Retailing Segment" in some near-30 markets in the U.S. Whole Foods says this claim is folly, and that the information from its competitor natural foods grocers will help it prove in court that the FTC is wrong.

The informal boycott, which is using the Internet -- Blogs and Web sites -- as its organizing point (organizing from a viral standpoint that is), is based on the simple premise that New Seasons Market is a local business and natural foods retailer (David), while Whole Foods is a mega-chain (Goliath), which by its subpoena is attempting to put unfair and onerous demands on the local New Seasons Market, along with engaging in "big brother" tactics by legally demanding the smaller natural grocer's trade secrets, which New Seasons Market CEO Brian Rohter believes could be used by Whole Foods Market, Inc. against his company, despite assurances by Whole Foods Market, Inc. and the FTC that only Whole Foods' lawyers FTC commission members and others related to the court proceedings will be able to view the data and related information.

Suggestions of such a boycott of Whole Foods' Portland stores first started appearing in the comments section of a post by New Seasons Market CEO Brian Rohter on the company's Blog in early December in which he talked about the subpoena against his company and how he planned to fight it. The comments to his posting were spontaneous, individual comments by local Portland area consumers saying they would no longer be shopping at Whole Foods stores because of the subpoena.

Many of these commentors took to e-mail, sending messages to friends in the region, asking them to boycott Portland-area Whole Foods stores. [Natural~Specialty Foods Memo has been sent copies of those e-mails because many Portland region residents have been following our coverage of the issue.]

At one point, the comments on the natural grocer's Blog got so hot and numerous about boycotting the Portland-region Whole Foods stores, that New Seasons' CEO Rochter made a brief post, reminding his readers that they shouldn't take out their anger on the Portland-area Whole Foods Market store-level employees, who he called "our friends and neighbors."

Additionally, in early December, Leslie Carlson, a contributor to the popular and politically progressive-oriented Blue Web site, wrote a post in which she said she would no longer shop at any Portland-region Whole Foods Market stores because of the supoena of New Seasons trade secrets.

Below is the leed paragraph from her stinging post in early December, in which she announces she will boycott Whole Foods Market stores in the region:

"I'm spitting mad about Whole Foods' latest, thuggish attempt to mess with Portland food retailer New Seasons. You may have read the Oregonian story or New Seasons' CEO Brian Rohter's post about the subpoena asking for proprietary and confidential business information. The subpoena sent to New Seasons is part of a screwed-up merger that Whole Foods has been trying to execute with rival Wild Oats for the past 18 months."

And, the closing paragraph of Ms. Carlson's post:

"In the past, I have occasionally stopped into Whole Foods. That ends today. Threaten my favorite locallly-owned grocery store, and I promise to never darken your door again."

You can read her complete post here.

In the post, Ms. Carlson also called for readers of the progressive Web site to join her in boycotting Oregon's Whole Foods stores because of the subpoena issue. There are currently 43 reader comments on her post. You can view the comments here. has a substantial readership among political progressives -- not just in Oregon but throughout the Pacific Northwest and in California -- who just happen to be a significant portion of Whole Foods Market's customer base.

Since Ms. Carlson's post came out in early December, it has been e-mailed to people all over Oregon (and throughout the U.S. for that matter), with notes attached asking them to boycott Whole Foods stores in the Portland region and throughout the state, because of the subpoena issue.

Patrick Alan Coleman, a Blogger at the popular Portland Mercury alternative newspaper Web Site, also has come out in favor of boycotting Whole Foods Market stores in the region because of the natural foods grocery chain's subpoena for local guy New Seasons Market's proprietary information. You can read him here.

Portland Food & Drink, a local Web site that covers all things consumable in the Portland region, also received numerous responses to a post it made about the issue in early December. Not all of the comments were advocating a boycott of the local Whole Foods stores. But a considerable number of them do -- such as these three examples below:

>lauhal63 says:
December 3, 2008 at 9:45 pm
Bullies! Whole Foods will not get another dime from me. Ever.

>Jessica Roberts says:
December 8, 2008 at 1:52 pm
Just sent WF management a message:
I was disgusted to read of your attempt to subpoena New Seasons’ sensitive corporate information. What, you are afraid that big bad 9-store chain New Seasons might offer better customer service and better products compared to poor little Whole Foods, with only 270 stores around the nation?You’re not fooling anyone. While I understand why it would benefit you to know exactly what next move your competition will take, I don’t see that it’s worth creating an image of yourself as an anticompetitive corporate bully. I used to shop at Whole Foods several times a month, because my work is right near one of your shops. No more. I’ll make sure to boycott your business for as long as you’re bullying local businesses in my back yard.

>Heather says:
December 16, 2008 at 11:36 am
I, too, will continue to shop at New Seasons, but now it will be exclusively. Furthermore, I will Twitter my “boycott Whole Foods” message, blog it, and take any opportunity to slam them verbally. I always knew there was something I didn’t like about WF. They really shoulda known better than to screw with Portland.
You can read the post, and the reader comments, at Portland Food & Drink here.

It isn't clear if the Portland region Whole Foods Market stores are overall experiencing a significant drop in sales because of this informal, primarily Web site and Blog-promoted boycott. However, this is what we do know, based on our reporting and research:

> Customer counts are down at some Portland-region Whole Foods Market stores. A Natural~Specialty Foods Memo (NSFM) correspondent was in Portland two weeks ago. While there he visited a number of Whole Foods stores. While in the stores he talked with employees, asking if they had noticed any drop-off in sales because of the New Seasons subpoena issue. First off, almost every single store employee he asked was aware of the issue. Second, a number of them told the correspondent they did believe there was a slight drop in business because some customers were boycotting the stores over the issue.

>During the two days in Portland, the NSFM correspondent also taked to four different sales representatives who call on Whole Foods stores. Two of the sales reps said they couldn't tell if there was any drop in customer counts since early December. However, the other two said in at least a couple of Whole Foods stores they call on, employees have been talking openly about a drop in business, which the store workers attribute primarily to the subpoena issue.

>The NSFM correspondent also visited a number of New Seasons Market stores. Employees at two stores in Portland said they've seen a significant increase in customers coming into the stores, both saying they thought it has lots to do with Portland residents not shopping at Whole Foods over the subpeona issue. In fact, one of the New Seasons store employees pointed out the post on the Web site to the NSFM correspondent. Additionally, the manager of one of the two New Seasons stores told the NSFM correspondent that numerous customers had mentioned they are doing all of there shopping at the store and Boycotting Whole Foods over the subpoena issue.

>NSFM talked to two vendors in the Portland market today. They commented that it appeared to them a number of the New Seasons stores had higher Christmas holiday shopping customer counts they they could recall seeing last year. One of the vendor represenatives also said he saw a man handing out flyers on day about two weeks ago in tee parking lot of a Portland Whole Foods Market store. He says the flyers asked consumers not to shop at Whole Foods because of its demands in the subpoena to New Seasons. We haven't been able to track down any of those flyers to date. It appears it was a "one-man effort" rather than part of a mass anti-Portland region Whole Foods mass-flyer distribution campaign.

>Lastly, it is without a doubt that Whole Foods Market is being hurt from a reputational and public relations standpoint in the Portland Metro region over the New Seasons subpoena issue. It appears there is very little support for Whole Foods' side of the issue, and lots of support for local guy New Seasons Market, as evidenced by the posts and comments on the local Blogs and Web Sites, along with all of the other observable activity regarding the issue.

Whole Foods Market and New Seasons Market essentially share the same customer base in the Portland regional market -- well educated consumers who buy primarily natural and organic foods, groceries and related products, but also desire and buy specialty, premium and ethnic foods. This shared customer base also consists of consumers who are "greener" than the average shopper, believe and practice sustainability more than the average consumer, and care more about local foods and ethical retailing than the general shopper does. In fact, the FTC sites New Seasons as one of its examples of "Natural and Organic Premium Segment" key competitive retailers to Whole Foods Market in its legal case against the Wild Oats acquisition.

In other words, this is Whole Foods' key customer base, as it is News Seasons,' and in Portland, as is the case elsewhere, it can't afford to lose very many of the consumers that comprise the segment because they are core Whole Foods Market customers.

However, although we have no quantification on the matter, we do know many of these consumers are being lost to New Seasons over the subpoena issue, and probably to other grocers, right now. This isn't good news for Whole Foods, particularly in Oregon, which is one of the top per-capita states in sales for natural products retailing. It will be even worse news if this informal, primarily Internet-driven boycott picks up steam and takes on more formal organizational characteristics in the days and weeks to come.

Since, as we reported earlier today, tomorrow is the deadline given to New Seasons Market by the FTC Administrative Law Judge to comply with Whole Foods' subpoena, the issue isn't going away, particularly in Portland, Oregon, anytime soon.

Based on our extension reporting and research on the issue, we wouldn't be surprised to see the boycott of Whole Foods stores in the Portland, Oregon region -- as well as seeing it spread throughout the state and maybe into other parts of the Pacific Northwest -- grow and intensify over the coming weeks, both via the Internet and in other more formal, person-to-person ways.

The power of using the Internet alone to spread such campaigns virally (social media) today is significant and real. Thus far the efforts to convince Portland-area consumers to boycott Whole Foods stores in the region have been mostly individual and spontaneous. However, that could easily change -- and change rapidly because of the speed of "Internet time."

Reader Resources

Most recent, related posts from Natural~Specialty Foods Memo (NSFM):

~December 28, 2008: Retail Memo: Tomorrow Deadline For Portland, Oregon's New Seasons Market to Turn Over Trade Secrets to Whole Foods Market's Legal Counsel

~December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'

~December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied

FTC v. Whole Foods Market - Whole Foods Market v. FTC: Recent coverage and analysis in Natural~Specialty Foods Memo (NSFM):

December 24, 2008: Christmas Eve Memo 2008: 'Twas the Night Before Christmas' - FTC v. Whole Foods Market, Inc. Version....December 24, 2008: Independent Grocer Memo: From Mrs. Gooch's to the Auto Body Business, Then Back to Retail, Chris Kysar is On A Healthy Organic Foods Retailing Roll....December 24, 2008: Retail Memo: It's 'Deja Vu All Over Again' - Judge Paul Friedman to Whole Foods Market, FTC: 'What's My Role Here?'....December 23, 2008: Retail Memo: FTC Postpones Scheduled February 16 Administrative Hearing on Whole Foods-Wild Oats Deal Break-Up Until April 6, 2009....

December 23, 2008: Independent Grocer Memo: National Grocers' Association Asks President-Elect Obama to Look Out For Independent Grocers When He takes Office in January....December 22, 2008: Retail Memo: Only Slightly More Than Half the 93 Natural Foods Retailers Issued Subpoenas By Whole Foods in its Case against the FTC Have Complied.... December 22, 2008: Retail Memo: Whole Foods Market Wants to Depose and Obtain Internal E-Mails From FTC Commissioner, Suggesting Possible Conflict of Interest Situation....

December 22, 2008: Retail Memo: At Hearing Today Judge Tells FTC to Provide Road Map of How Whole Foods Could Take About Merged Companies Should Ruling Go In its Favor....December 19, 2008: Retail Memo: Whole Foods' Lobbying Effort Baring More Fruit - House Committee Leaders Send Letter to FTC Chair Similar to One Sent By Senate Leaders.... December 18, 2008: Retail Memo: 'This Isn't Over Yet' - New Seasons Market CEO On Judge's Decision the Natural Gorcer Must Turn Over Trade Secrets to Whole Foods Market.... December 18, 2008: Retail Memo: The 'Whole Primary Source Scoop' -- FTC and U.S. Federal Court Documents on the FTC v. Whole Foods Market, Inc. Case....

December 17, 2008: Breaking News: Judge Orders New Seasons Market to Comply With Whole Foods' Subpoena and Submit Sales Data, Financial Records and Other Trade Secrets....December 16, 2008: Retail Memo: Whole Foods, Wild Oats and Boulder, CO...And the Rocky Mountain News' Editorial Take On FTC v. Whole Foods Market, Inc....December, 15, 2008: Retail Memo: Eight Members of U.S. Senate Judiciary Committee Send Letter to FTC Chairman Regarding FTC's Legal Case Against Wild Oats' Acquisition....

December, 13, 2008: Retail Memo - Analysis & Commentary: More On FTC v. Whole Foods Market, Inc. and Whole Foods Market, Inc. v. FTC....December 9, 2008: Organics Category Memo: Wither Organics? Organic Food & Grocery Category Sales Down; But Double-Digit Growth Still Likley With Mass Market Lift....December 9, 2008: Retail Memo: Whole Foods Markets' 'Whole Legal Paycheck:' Three Top Washington, D.C. Law Firms Teaming Up On The Natural Grocery Chain's FTC Lawsuit....

December 9, 2008: Retail Memo: Whole Foods Market CEO John Mackey and Team Launch First Aggressive Attack Against the FTC's Legal Case at Press Conference This Morning....December 8, 2008: Retail Memo: Mr. Mackey (and the Whole Foods Market Troops) Goes to Washington....December 8, 2008: Retail Memo: Breaking News - Whole Foods Market, Inc. Files Lawsuit Against the FTC; Argues the Regulator Violated the Company's Due Process Rights....December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter and Whole Foods Market Co-President Walter Robb Discuss and Debate the Subpoena Issue Online....

December 7, 2008: Retail Memo: New Seasons Market CEO Brian Rohter Speaks Out Again Today on the Whole Foods Market, Inc. Subpoena of His Company's Data....December 7, 2008:Retail Memo: Whole Foods Market Retains Top Washington D.C. lawyers and Politically-Connected Lobbyists to Plead its Case Against the FTC....December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas....

December 6, 2008: Retail Memo: Fast-Growing NF Chain Sunflower Farmers Market Responds to Whole Foods Market, Inc. Subpoena For Sales, Financial and Related Information....December 3, 2008: Retail Memo: More on the Whole Foods Market-New Seasons Market Subpoena Issue; FTC Holding Firm For February, 2009 Hearing....December 2, 2008: Retail Memo: Whole Foods Market, Inc. Closes $425 Sale of Stock to Private Equity Firm; Adds Members of the Firm to its Board of Directors....

December 2, 2008: Retail Memo: Portland, Oregon-Based New Seasons Market CEO Brian Rohter Responds to Whole Foods Market's Paige Brady....December 2, 2008: Retail Memo: Whole Foods' Paige Brady Responds to Yesterday's New Seasons Market Piece; Lots of E-Mails; Issue Heats Up On the New Seasons Market Blog....December 1, 2008: Retail Memo: Whole Foods Wants A Court-Mandated Financial Records Dump from Portland-based New Seasons Market; it Says For its Battle Against the FTC.

FTC v. Whole Foods - Linkage from the Natural~Specialty Foods Memo archives:

Click here, here and here for stories about the FTC-Whole Foods issue from our archives, including pieces about mass market and natural foods class of trade retail competitors.

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