Retail Memo: Are Whole Foods Market, Inc.'s Current Problems In Part Do to the Retailer's Losing Track of its Original Mission?

The two-story, approximately 75,000 square foot Whole Foods store pictured above in Pasadena, California, the retailer's largest store in the Western USA, is a natural foods and products emporium, featuring everything from ultra-premium confections, gourmet baked goods and premium-priced fresh, prepared foods like sushi and lobster, to expensive yoga clothing made from organic cotton, along with more basic natural and organic food and grocery products.

Opinion--Guest Retail Memo: By Mathew Dubord.

Whole Foods Market Inc. — or, as it's become better known recently, No.48 in the bestselling book "Stuff White People Like" — has problems. Chiefly, there are fewer people, white or otherwise, interested in paying a premium for its ethically cultivated, fair-trade, organic gourmet fare. Eating might be a necessity, but the current economic downturn has sent consumers scurrying for cheaper grub, which in turn compelled Whole Foods to announce that its third-quarter financial results were off by more than 30 percent. Its stock price was accordingly hammered last week.

For 30 years, Americans have been drastically modifying their diets. The organic movement specifically, once the province of affluent Berkeley bohemians and an elite cadre of idealistic farmers who despised big agribusiness, has made significant inroads with an American public raised on Wonder Bread and canned ham. Whole Foods boomed alongside this national trend and was handsomely rewarded. But sticker shock was always an issue; the grocer earned the derisive tag "Whole Paycheck" because even free-spending customers with a jones for wild-caught salmon were taken aback when the contents of a single reusable shopping bag ran them $100.

Still, when times were good, folks with the wherewithal could view such spending as a kind of "virtuous inflation," a volitional exercise that flew in the face of actual inflation, which for years was low. Consumers didn't have to shell out a lot of dough for organic plum tomatoes lovingly cultivated in volcanic soils.

They did so because they could. And because this choice, while economically perplexing, allowed them to bolster a view of themselves as opposing rapacious mega-corporations that peddled genetically modified products grown in vast fields rendered toxic by industrial fertilizers and pesticides.

It was political action, practiced at the dinner table, energized by books such as "Fast Food Nation" and "The Omnivore's Dilemma." It's the same spirit that moves people to pay extra for hybrid cars. Paying the higher price is self-imposed inflation, but Prius lovers prefer to think of it as a down payment on a future with fewer environmental problems caused by automotive emissions and oil drilling in wildlife refuges.

Grocery store chains that cater to the less persnickety sensed the opportunity, too. Hence, we now have Whole Foods-esque selections at Ralphs and Vons. And as several commentators have noted, even Wal-Mart has stepped up, officially bringing the gourmet-organic trend to the masses.

This is all great, except that it reveals a point of profound ignorance about Americans and their eating tendencies. We are recent converts to the idea that you absolutely are what you eat, unlike citizens from countries with a truly embedded food culture, such as France and Italy. Unlike a Parisian or Roman, we're unlikely to insist on organic chow if it means we'll have to drive less or turn off the air conditioning all summer.

In fact, when the economy goes south and belts are tightened, the first area of spending that we seek to attack is food: As the cost of consumer goods jumped 5 percent this year, business articles have relayed tales of shoppers scouring the aisles for cheap store-brand products and supermarkets doling out more coupons.

Any form of "virtuous inflation" quickly vanishes in the face of the real thing. I'll probably be just as healthy if I eat the plain old nonorganic apple, even though it may have been sprayed with pesticides. I'll certainly be less stressed about my bottom line. Ultimately, this is a strength: Under duress, many Americans focus on the fundamentals and defer gratification on the indulgences.

Moreover, Whole Foods these days seems to hawk fewer daily necessities and more expensively marketed perks. Several of the company's new stores, such as the two-story circus-like affair in Pasadena, Calif., have engendered a backlash among those who believe that Whole Foods is now more interested in promoting a luxury lifestyle that includes chocolate fountains and tapas bars. Off to the neighborhood farmers market those shoppers will go.

Whole Foods ultimately fueled its success on a very dangerous business wager: that once customers had grown accustomed to the good vibes that virtuous inflation inspired, they would ignore their self-interest. Whole Foods is struggling to sustain this key psychological link (and regrettably, the larger organic movement will probably see a rollback of its recent gains as consumers ride out the economic downturn).

A scientist would point out that the body doesn't care what you're feeding it, so long as it's nourishing. When times are tough, that means the value-pack bag of frozen chicken thighs wins and the vegetarian-fed, free-range whole fryer does not. Virtue is a funny thing: It has a hard time competing with an empty stomach. Or an empty wallet.

Natural~Specialty Foods Memo Editor's Note: Matthew DeBord is a writer in Los Angeles. He originally wrote this essay/opinion piece for the Los Angeles Times, where it was published earlier this week. The opinion is that of the writer and not Natural~Specialty Food Memo.

Retail Memo: Whole Foods Opens its First store in Napa, America's Food & Wine Capital City

Don't tell Whole Foods Market, Inc. that food retailing is all about small formats in 2008. The supernatural and lifestyle-oriented grocer yesterday opened its latest food emporium in Napa, California, America's capital city for food and wine.

The Napa store is the grocer's 25th market in Northern California. It's hard to believe, but the new 50,000 square foot Whole Foods' store in Napa's Bel Aire Plaza is the grocer's first store in this city known worldwide for it's wine and food-oriented businesses and it's foodie culture.

Surrounded by lush green vineyards, wineries, farms, and specialty and natural foods producers, Napa might just be the perfect place for a Whole Foods Market Lifestyle superstore. Yesterday, the city got its first one.

The market opened yesterday morning to a crowd of Napa foodies, many of whom were waiting outside for the doors to open as Whole Foods' conducted it's ritual fresh bread baking to mark the opening of the new store. In Napa, the opening of a new food emporium has all the pomp and circumstance of the opening of a automobile plant in Detroit.

A local high school band played music while the first loaf of bread was baked, and store Team Leader David Cosper, joined by the city's mayor and other Vip's opened the door to Napa's first Whole Foods store. And befitting Napa's status as America's culinary and wine capital city, the Bel Aire Plaza Whole Foods store is a food and wine lovers mecca.

The wine bar (above) at the new Napa, California Whole Foods Market food emporium.

Among the store's special features, in addition to the nearly 30,000 natural and organic grocery items on its shelves, is a wine bar and bistro. The wine bar is part of the store's massive wine and craft beers department. The department offers over 250 wines from local, Napa County wineries, and more than 1,000 wines from around the world. There also are over 300 hand-crafted beers, ales, lagers and ciders offered for sale in the store-within-a-store wine and beer section. The wine bar offers wines by the glass, wine and food pairing events in conjunction with the market's in-store culinary center, and "meet the winemaker" events featuring local vintners.

The in-store culinary center, which will feature food events hosted by well-known local chefs, is at the heart of the store's extensive prepared foods offerings. The new Napa Whole Foods Market store features fresh, prepared entrees, side dishes, soups, salads and more, all made with a focus on using local, organic ingredients, meats and poultry from the region's renowned farmers, producers and purveyors.

There's also an open grill restaurant with a Latin flair in-store. It features prepared meals like tri-tip beef with adobo sauce, slow-roasted pork shoulder, bacon-wrapped chicken legs with mojo sauce, and a wide-variety of skewered and grilled meats and vegetables. Napa has a large Latin population, and keeping with the store's local theme, the grill pays homage to the culinary flair of Latin America, combined with the use of foods from the Napa region.

The store's prepared foods offerings don't stop at the grill. There's a wood-fired pizza oven in-store, a huge delicattesan serving handcrafted sandwiches, hundreds of prepared, grab-and-go food items from throughout the world, hot and cold bars featuring every version of salad imaginable, gourmet prepared hot foods, and other delights. It's like having a dozen different full-service ethnic restaurants together under one roof--and then some.

Buy local, as the sign says in the store's produce department, is a major theme across all departments in the new Napa Whole Foods.

The store's produce department is more like an entire farmer's market. Not only is it packed with organic fresh fruits and vegetables of every kind, the department features the exotic: numerous varieties of wild mushrooms one might need a guidebook to identify, fresh herbs by the score, and even several produce items a seasoned Napa foodie might need to get advice on what to do with. A major emphasis in the produce department is buying and selling local--as it is throughout the store in fact. The local angle, do in large part to Napa County's bounty of foods and wines, is even more pronounced than it is in the grocer's other California stores.

This local emphasis extends to the store's elegant butcher shop and fresh seafood counters. Organic, all natural, grass fed and other sustainable meats and poultry fill the butcher shop's refrigerated cases. Many of these items are from local farmers and producers in Napa and Sonoma counties. In fact, it seems nearly every sustainable and gourmet meat purveyor in the region is represented, from organic, free-range poultry producers, to local gourmet sausage makers.

The butcher shop also features prepared, ready-to-eat meats fresh-cooked to order. There's an in-store smoker in the department that turns out freshly-smoked beef, pork, poultry and other gourmet meat and seafood items. Another feature of the butcher shop is a large selection of value-added meats and seafood. There's gourmet marinated steaks, poultry, fish and more--all ready for shoppers to merely take home and pop in the oven for a white tablecloth restaurant quality dinner with little or no effort.

The cheese department sells over 400 varieties from all over the world, and lots of local cheeses as well.

Similar to most of Whole Foods' other new stores, the new Napa store also has a huge in-store cheese department, a baked-from-scratch fresh bakery, a huge whole body/whole health department and numerous other special features.

The Napa store's cheese department features over 400 cheese varieties from around the world, including nearly every variety of quality cheese brand produced in California, which is considerable since the Golden State now leads the U.S. in cheese production. There's also an antipasto bar in the cheese department, featuring peppers, olives and more, including those from the region's numerous local producers and

marketers.

With it's entry into Napa, Whole Foods joins a crowd of premium and specialty grocers in America's capital city for gastronomy. There's a branch of New York's famed Dean & Delucca gourmet grocery nearby. There's also Oakville Grocery, which has long been the region's leading gourmet food retailer. Safeway Stores has an upscale Lifestyle supermarket in Napa. The store features a large selection of specialty, gourmet, natural and organic foods items. It's also a very upscale version of the chain's lifestyle format in terms of the store's design.

Right around the corner from the new Whole Foods is a Trader Joe's market. The Napa branch of the popular specialty grocer is very successful. With it's close proximity to Whole Foods, Napa foodies won't have to travel too far between stores to get their favorite organic and specialty foods' fixes. In fact, the only down-side to Whole Foods' Napa location, according to shoppers at the store, is that combined with all the traffic Trader Joe's gets in the shopping center they share, it's going to be a madhouse in terms of finding a place to park near the store.

Napa also has numerous other food stores, some more upscale than others. Vallerga's, a long-time upscale, family-owned grocer with three stores in Napa, stands to be hurt by the new Whole Foods. Although fairly upscale, it's stores are less than half the size of the new Whole Foods, and don't have the in-store service departments to compete. The stores are the local guys though, have a great reputation for customer service, and carry an excellent selection of specialty and natural groceries and fresh foods in their own right.

Napa also has a large Raley's Supermarket, which is fairly upscale, and a Lucky supermarket, a more middle range but large full-service supermarket that formerly was an Albertsons store. There's also a progressive, upscale independent called Brown's Valley Market, which draws lots of food -loving shoppers in the region through its doors.

Napa is a competitive retail food market, as well as a region full of food and wine-loving consumers. At 50,000 square feet, the new Whole Foods is the city's third-biggest supermarket, behind Raley's and Lucky. However, it's head-over-heels the most upscale, premium quality and natural foods-oriented store in the region. Local observers say the store will draw from at least a 40-mile radius, including the nearby cities of Sonoma, St, Helena, Vacaville and Vallejo, among others. That's lots of people--and even more important for Whole Foods, lots of foodies.