If you’re a loyal shopper, you already know why people love Whole Foods Market. But if you aren’t a regular, you may have wondered why is Whole Foods so popular?
Here’s what I know from having worked for them for over 2 decades:
Whole Foods is the leader in natural & organic foods, but, like Starbucks, it creates stores that become destinations for friends to gather. The acquisition by Amazon has lowered prices and Prime members get even better deals. Despite a few Amazon speedbumps, the company continues to be a great place to work and shop.
But that’s just a brief snapshot of Whole Foods, why people love it despite the reputation of higher prices and the sometimes polarizing viewpoints of founder and CEO John Mackey.
So let’s keep going!
We’ll talk about all of that, and discuss a little bit of the history of Whole Foods.
Just keep reading!
— Organics (@ec0organic) May 22, 2017
When did Whole Foods become popular?
Whole Foods Market is the largest American chain of supermarkets specializing in natural and organic foods.
It’s based out of the town I grew up in, Austin, TX, and operates stores all over the United States, Canada, and the United Kingdom. Whole Foods was bought by Amazon in 2017.
But it wasn’t always a giant multi-national corporation. Whole Foods started with 1 tiny store (the one I originally worked at) in Austin, TX in 1980. That store was around 10,000 square feet which is not much bigger than a 7-11.
Now it did grow beyond 1 store fairly quickly. But even when I started with the company in 1998 it was a small chain of just 5 stores.
No Amazon, not publically traded. Just a bunch of hippies selling soy milk, raw milk, and patchouli incense (tongue slightly in cheek there).
Growth by buying other chains of natural food stores
Whole Foods’ early growth came mostly from buying up smaller chains of stores and a few stand-alone stores. Some of the biggest names they acquired were:
- Mrs. Gooch’s Natural Food Markets (Los Angeles)
- Bread & Circus (Massachusets)
- Wellspring Grocery (North Carolina)
- Fresh Fields (East Coast)
There are countless others, but those were the biggies that Whole Foods bought up early on which sped up their growth considerably.
Making natural and organic foods mainstream
Whole Foods started to gain traction in the early 90s when consumers were really starting to focus on high quality, natural food. And they were willing to pay more for it.
As organically-grown became more in demand, more and more mainstream grocery shoppers wanted it.
But mainstream shoppers didn’t always want to step into the tiny, sometimes dirty and poorly-run health food stores than often dominated cities like Austin, Boulder, Santa Fe, and other places. Whole Foods filled this gap.
Whole Foods supermarkets were smaller than Kroger or Safeway.
And they were a lot more aesthetically pleasing and fun to shop in. Whole Foods was not a conventional supermarket. It combined health-food stores with supermarkets.
Shoppers loved natural, whole foods. They loved not having to check the ingredient labels on products and just buy knowing they would be free of artificial ingredients, preservatives, colors, and flavors.
You also have to understand that in the ’90s, there was no Trader Joes, no Sprouts, or other big competitors other than Wild Oats. And mainstream grocery stores had little to no natural or organic offerings like they do today.
In 2013, they became the first grocery store chain to label all food made with GMOs. But they had banned them from their private label products years before that.
Whole Foods wanted to change the way people ate and make them healthier. All while promoting sustainable, fairly harvested foods and ethically sourced meat.
Read more about Whole Foods history on their site.
— Business Insider (@businessinsider) August 17, 2015
Is Whole Foods better and what’s special about it?
Whole Foods is known for selling organic and all-natural products. But beyond that, they ban all artificial colors, flavors, and preservatives. They also have strict animal welfare standards in addition to greater attention to store decor, ambiance, and customer service.
But, lots of stores sell “organic” and “natural” products, so what makes Whole Foods so special?
Well, they actually care about their customers.
In fact, they care so much that they have gone above and beyond the standards set by the FDA. As there is no definition of “natural” food, Whole Foods has compiled its own list of unacceptable ingredients.
These unacceptable ingredients include, but are not limited to:
- Hydrogenated fats
- High-fructose corn syrup
- Artificial sweeteners
- Artificial colors and flavors
If a food contains any of these unacceptable ingredients, you won’t see it on their shelves.
I think that in itself makes Whole Foods pretty special. You can see all their quality standards on their site.
However, because they are so picky about ingredients, their prices are higher.
Top-notch products bring top notch prices. You can read more about why the prices are so much higher in this recent article. What really surprised me was how little an impact Amazon buying them had on their prices.
Just click that link to read it on my site.
But wait, there’s more!
Whole Foods’ humane animal standards
Whole Foods also published standards for the humane care and slaughter of animals.
They work with farmers and ranchers to develop a stringent set of standards regarding the treatment of animals. They even have standards regarding the slaughtering of animals.
Some of these standards include no antibiotics, no added growth hormones, and the requirement that cattle, sheep, and goats spend at least two-thirds of their lives on pasture.
All of the meat sold in the meat department, except kosher turkey, is certified to meet animal welfare standards set by the Global Animal Partnership.
These standards not only impact the life of the animal, but they also impact the final product.
Steak. I’m talking about steak. To read more about what grocery stores have the best steak, and why, head over to this recent article, where I talk about which grocery stores have the best steak.
Just click that link to read it on my site.
But, again, if the care of livestock doesn’t meet their standards, Whole Foods won’t sell the meat in their stores.
The “5-Step Animal Welfare Standard” at Whole Foods is 6 steps. 🙄 pic.twitter.com/FXWeaU3EEa
— Leo Polovets (@lpolovets) June 7, 2017
Whole Foods’ environmental impact
Whole Foods cares about the environment, too.
They stopped using plastic bags in 2008, before being eco-friendly was trendy.
The cleaning products they sell are eco-friendly. In fact, they prohibited their stores from selling any products that were tested on animals decades ago.
They even developed an “Eco-Scale” for cleaning products.
This scale evaluates products based on environmental impact, safety, source, and animal testing. Products are given a rating of green, yellow, orange or red. Whole Foods does not sell any products that fall in the red on the scale.
Does Jeff Bezos own Whole Foods?
Yes. Jeff Bezos owns Amazon & Amazon purchased Whole Foods Market in 2017 for 13.7 billion dollars. At the time, Whole Foods was publically traded with a number of share-holders owning a percentage of the company. The company has since been returned to being a private corporation, no longer traded on the stock market.
In fact, a lot of people thought this was a big mistake.
But, at the time, Whole Foods’ sales had been declining drastically. Lots of long-time key company leaders like Walter Robb, Ken Meyer, and David Lannon were leaving (some of their own accords, others not).
And a consulting firm had been hired to standardize stores.
The reason for the decline was that companies like Trader Joe’s and Aldi were also selling organic foods and natural food products at lower prices than Whole Foods. Plus, almost all large so-called conventional grocery stores like Safeway, Kroger, and Publix all had large sections for natural and organic items too.
It was the writing on the wall John Mackey should have seen years earlier.
Selling groceries can be very tricky and the profit margins can be slim. Amazon has tried the grocery business before with AmazonFresh, but it has yet to become a household name like Amazon Prime. That’s not to say they are failing at it. They are not. But that doesn’t make it easy, either.
Bezos has had his sights set on online grocery sales for a long time.
Bezos saw the acquisition of Whole Foods as a good stepping stone. They have a great reputation for selling quality products. They also have hundreds of stores turned distribution centers.
But, because groceries are perishable, there are also a lot of risks.
But if it’s one thing Bezos knows it’s ordering and delivery efficiency. And for long-time Whole Foods fans, luckily, John Mackey is still CEO of Whole Foods. Love him or hate him, he is the man who almost single-handedly made natural and organic groceries a household concept.
Also, Amazon has also given added sales and discounts to Prime members and cut prices across the board for everyone. We’ll get more into that in the next section.
But, if you want some insight as to how items get selected to go on sale, check out this recent article on my blog. What really surprised me was how cutting prices can actually boost a store’s profits.
Just click that link to read it on my site.
— JackLondonSquared (@JackLSquared) March 1, 2020
What changes has Amazon made to Whole Foods?
The top changes that have been made at Whole Foods market since being acquired by Amazon include:
- Changes in defining part-time and full-time employees
- Reduced benefits for part-time employees
- Overall employee hours were cut to offset wage increases enacted for Amazon employees
- Prices were reduced by an average of 20% across the board
- Amazon Prime members were given additional discounts
- Complaints about the quality going down for fresh fruits and vegetables
Things have been a little uncertain since Amazon acquired Whole Foods in June of 2017. (source)
Before the acquisition, Whole Foods was well known for the way they treated their employees, their above-average pay, and benefits packages.
Let’s examine some of what I mentioned above in greater detail.
Cutbacks for employees
Since then, they’ve cut health care for part-time workers. Now employees have to work a minimum of 30 hours per week to get medical benefits.
They’ve also eliminated stock options for lower-level workers and restructured and streamlined the purchasing process.
This has prompted a few employees to attempt to unionize. Which Amazon has whole-heartedly fought against. But then Whole Foods has long been anti-union, so that’s not new behavior. It’s also not the first time that’s happened in Whole Foods history and it won’t be the last.
However, it’s pretty unlikely you will ever see Whole Foods as a company switch to being union.
The reason is that the vast majority of the 91,000 employees of Whole Foods are pretty happy, and fairly well paid. I can attest that when I was with the company, my pay was always pretty decent (and I started at $4.25/hr so I didn’t come in at some high level).
And my health insurance was never better or cheaper than it was when I was with them (I left in 2013).
The quality of fresh fruits and vegetables
Some shoppers have stopped shopping at Whole Foods, citing that the quality of the produce is not up to the standards they have come to expect.
Shoppers have complained that the produce is “bruised, discolored, tasteless, and rotten…” (source).
Many consumers simply don’t equate Amazon with quality. Rather, they associate Amazon with being just another big box store.
Whole Foods insists that nothing has changed. And in all honesty, as I do still shop there sometimes, I don’t see any major differences.
However, Amazon is huge. They have a ton of inventory and can afford to sell items at lower prices. This may attract a different kind of customer, but they can certainly afford the smaller profit margins.
To learn more about grocery store profits, and how different types of stores make more money than others, read this recent article on my blog.
Just click that link to read it on my site.
— CNBC International (@CNBCi) July 16, 2018
Lower prices and Prime member discounts
It’s not all doom and gloom though and any transition this large is going to hit a few speedbumps.
On the plus side, Amazon Prime members (all 105 million of them – source), get big perks at Whole Foods Market.
- An extra 10% off yellow sale items
- Prime member deals exclusively for Amazon Prime members (up to 50% off)
- Free 2-hour delivery
- 5% back at Whole Foods Market & Amazon.com if they use the Amazon Prime Rewards Visa Card
Not a Prime member?
No worries. Amazon buying Whole Foods has also meant lower prices across the board. On average, Whole Foods prices have gone down as much as 20% in some cases (source).
And if you combine those price cuts with a Prime membership, the savings can be pretty dramatic.
Even beyond cheaper prices, a Prime membership also gets you:
- Free two-day shipping
- Amazon Prime streaming video and music services
- Delivery services like Prime Now in certain cities.
- Unlimited photo storage on a Kindle or Fire device
Who founded Whole Foods?
In 1978, John Mackey and Renee Lawson Hardy opened Safer Way Natural Foods in Austin, Texas.
By 1980, SaferWay Natural Foods merged with Clarksville Natural Grocery. Clarksville Natural Grocery was owned by my old pal Craig Weller and Mark Skiles.
This merger resulted in what is now known as Whole Foods Market. This first store was only 10,500 square feet and had 19 employees.
Mark didn’t hang around very long. But Craig stayed with the company for a long time, leaving the company in the late ’90s.
The original store was destroyed by the worst flood in 70 years in 1981. The store was drowned in water and sewage. Inventory was ruined and looters came and trashed the store.
With the help of the community, vendors, creditors, and investors, the store was able to reopen after only 28 days. Customers pitched in to help with clean up and employees worked for free to get the store back open.
I didn’t start working there for another 7 years. But, I still remember putting sandbags around the entrances every time it rained. Luckily, that store never saw that bad of a flood ever again.
Throughout its life, Whole Foods has grown from a small natural foods store to the international giant it is today.
In 1984, John Mackey assumed leadership of Whole Foods.
But even before then, Whole Foods began moving into Houston and then into Dallas. In 1989, Whole Foods expanded westward to Northern California. In 2002, they expanded into Canada, and shortly thereafter, into the UK.
They acquired most of their stores by purchasing existing local food chains and rebranding them. As I mentioned above, some of these stores include Wellspring Grocery, Mrs. Gooch’s, and Fresh Fields, among others.
Starting and running a grocery store is no easy feat.
If you are considering being like John Mackey and starting your own grocery stores, read this recent article where I talk about what it takes to run a grocery store. Grocery store managers don’t have to be an expert at cutting meat or be a certified cheesemonger.
But they do have to know a little bit about a whole lot of things. They also have to be quick-thinking and be able to prioritize needs quickly.
Just click that link to read it on my site.
— Monterey Holistic (@MBHolistic) November 6, 2018
When did Whole Foods go public?
Whole Foods went public for $2.125 per share in January of 1992.
Today Whole Foods has more than 400 stores in the US, Canada, and the United Kingdom. They also have more than 91,000 employees. It is currently the biggest natural food chain in the United States.
Whole Foods was traded on the NASDAQ with a market capitalization of over 10 billion dollars and has been included in Fortune’s 100 Best Companies to Work For.
Did you catch the word was traded? That’s because it’s not anymore.
When Amazon acquired Whole Foods, it became a privately-held enterprise. Whole Foods is totally owned by Amazon, which is itself, a publicly-traded company. Thus, it was delisted from NASDAQ.
Their peak stock price before being removed from the NASDAQ reached over $60 per share in 2013.
However, they started getting beaten by the competition as eating organic, natural foods became more mainstream. People were able to buy organic, natural foods at Walmart and Kroger at much lower prices.
Trader Joe’s provided direct competition, and at-home kits like Blue Apron and Hello Chef also changed the way people shopped and ate healthily.
What are Whole Foods’ success factors?
With Whole Foods, “organic,” “natural,” and “healthy” aren’t just buzz words or marketing. They actually stand for something.
1. Organic standards
In fact, back when Whole Foods Market started, there was no legal definition or standard for what “organic” meant.
I still recall walking the produce section on my shifts and seeing signs that said “transitional” “IPM” (integrated pest management) or “pesticide-free” all of which were terms commonly used back them for farms that were moving towards being organically-grown.
The national organically-grown standards came into play in 1990 with Congress passing the Organic Foods Production Act (OFPA). Those rules were updated in 2002. (source)
Whole Foods Market played a very large role in the drafting of those original standards, being the first national food retailer invited to join the USDA advisory board. Whole Foods is also a key member of the Organic Trade Association.
My friend Margaret Wittenberg, long-time Whole Foods employee, has been spearheading that mission for decades.
Whole Foods had a mission to bring healthier, natural food into supermarkets. That mission is apparent in everything they do. From its high product standards to the requirement of farmers and ranchers to treat livestock humanely.
Now lots of people love the idea of organically grown food.
But many don’t want to pay the higher prices for that. But how much more does it really cost?
If you’ve ever wondered that, check out a recent article where I break down the exact price differences of all your favorite things. I also review the items you should definitely buy organic if you can’t afford to shop that way for everything.
Just click that link to see it on my site.
— Antonio Nunez Lopez (@AntonNunez) February 27, 2020
2. Strong brand identity
Whole Foods’ competitive advantage comes from its strong brand identity and high-quality customer experience.
Think about being in a Whole Foods store.
You’ll hear songs you know over the speaker system. Soft lighting, beautiful stained concrete, reclaimed wood decor, and lots of friendly employees.
Now compare that to a Target or Safeway.
The difference in “feel” is pretty striking and drastic. No one goes to Safeway just to hang out and meet up with friends. But at Whole Foods that’s a daily occurrence.
3. Leading, not following
Whole Foods has long established itself as the leader in organic and natural food.
But as we’ve discussed above, they have also led the way in things like:
- Animal welfare standards
- Ingredient quality standards
- Employee pay and benefits
- Giving back to the community
Part of their success also comes from their work environment.
Whole Foods actively promotes growth and happiness among its employees. They offer a mentoring program to aid in training, generous employee discounts (20%), and wellness programs for employees as well.
4. Location, location, location
Geographical allocation is another success factor.
Strategic placement of stores increases accessibility and convenience when shopping. A typical store has about 200,000 people living within a 20-minute drive. They have a large number of college-educated residents and easy access to roadways. (source)
Now that’s not to say they haven’t picked a few dud locations over the years.
But generally speaking, they spend a lot of time, effort, and money picking their locations. And it’s paid off.
When I walk into a Walmart, I don’t have any expectations of finding an employee outside of the cash register area and the greeter at the front.
I also don’t have any expectations of walking down the wine aisle at most grocery stores and finding a sommelier (knowledgeable, and often certified wine steward) to help me select a great bottle of wine.
Lastly, if I approach the meat section at Trader Joes, I don’t have any expectation that I can find a butcher to cut me a steak to order.
But at Whole Foods Market, those things happen every day.
In fact, back when I was a leader for Whole Foods, I was sometimes criticized for making my top core value promoting team member (employees) happiness and excellence. At the time, when people ranked Whole Foods core values, it was common to put satisfy and delight the customers at the top of the list.
But I felt strongly (and still do) that you can’t satisfy and delight customers with unhappy employees.
So putting their needs first was always most important to me. And everything else fell into place once that happened.
Did I answer everything you wanted to know about Whole Foods?
In this article, I talked about the things that make Whole Foods stand out from other grocery stores.
I went over some of the histories, much of which I lived, discussed the acquisition by Amazon, and talked about what makes Whole Foods so successful.
I also talked about the standards set for the products Whole Foods sells. From the humane treatment of animals to the environmental impact of cleaning supplies.
Whole Foods really does try to be as socially and environmentally friendly as possible.
I began my career with Whole Foods Market in 1988 and left the company in 2013.
While certainly not without some faults or deserved criticisms, overall, I still love the company I called home for more than 2 decades.
What do you think about Whole Foods Market?
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