Whole Foods is the largest retail giant in the natural food sector in the U.S. with 168 stores nationwide (plus in Canada and Britain) and annual gross sales now exceeding $4.6 billion. In fact, Whole Foods has grown twice as fast the leading corporate grocer, Walmart, over the last four years. Started in a humble storefront at the corner of 8th and Rio Grande in Austin, TX back in 1978 by self-described “free market” libertarian and current CEO, John Mackay, Whole Foods grew parasitically throughout the 1990s by absorbing its competitors: Bread & Circus, Fresh Fields, Merchant of Vino, Mrs. Gooch's, Bread of Life, and Wellspring Markets. "If someone had been ruthless enough, or opportunistic enough -- or, really, just smart enough -- we could've been crushed," Mackay noted in a 2004 interview, "But I don't fear that anymore. We're not that vulnerable anymore. Our culture is too strong. Our locations are too good. And we know so much more than we used to." Today, the only contenders left in the ring to challenge Whole Foods are Wild Oats and Trader Joes.
Back in 1992, a year after Whole Foods made its first public stock offering, Mackay proudly declared "we're creating an organization based on love instead of fear." A devote admirer of Star Trek’s United Federation of Planets (with a framed poster of the starship Enterprise on his wall), Mackay styles himself a democratic renegade when it comes to corporate management. The Whole Foods’ “Declaration of Interdependence” includes such high-minded principles as “satisfying and delighting our customers" and "team-member happiness and excellence.”
Like Wal-mart’s “associates,” Whole Foods doesn’t have workers – instead they are called “team members.” Whole Foods employees are hired on a provisional basis, and after four months co-workers get to decide whether or not someone stays on their “team.” Bonuses beyond the base wage rate are pegged according to performance, so just like the televison series “Survivor” a climate of competitive efficiency is internalized. If you’re not good enough, it’s your “team” that will vote you off the Whole Foods island, not the boss. This type of propaganda and conditioning is supposed to insure company loyalty.
At the same time, Mackey’s personal antipathy towards labor unions and workers rights has become rather notorious within the business world. He once said, "The union is like having herpes. It doesn't kill you, but it's unpleasant and inconvenient and it stops a lot of people from becoming your lover." As early as 1998, Whole Foods refused to endorse the United Farm Workers (UFW)’s campaign on behalf of better conditions and higher wages for California’s 20,000 strawberry pickers. In 2000 the U.S. Dept. of Labor even went to court against Whole Foods over $226,000 in overtime wages that had not been paid to obviously disgruntled “team members.”
In July 2002, when employees at the Whole Foods in Madison, WI, dared to organize under the auspices of the United Food and Commercial Workers (UFCW), they incurred the wrath of Mackey, who flew into town for a three hour long mandatory “employee presentation.” Nonetheless, workers still voted for the union two days later. One of the organizers behind the Madison drive, Debbie Rasmussen, was later terminated for having given a botched latte to a co-worker, Julie Thayer, another union supporter who was also fired. Whole Foods ultimately crushed the fledgling union through persistent NLRB challenges (with the help of business union incompetence according to more radical union activists), sending a clear message to “team members” throughout the rest of Mackay’s empire. To learn more about this struggle: www.wholeworkersunite.org
Most Whole Foods shoppers are kept blissfully ignorant of the labor strife behind the deli counter. According to grocery retail analyst, David Livingston, quoted in the Sept. 15th, 2005 issue of the Capital Times, "Whole Foods is so different from conventional grocery stores. They tend to have their own loyal customer base.” The apolitical high status nonchalance that pervades Whole Foods can be appealing. To quote Livingston once again, shopping there is sort of “like being part of a cult.” Prof. Jerald Jellison of the Univ. of Southern California puts it a slightly different way: “Whole Foods offers a psychological absolution of our excesses. After filling your cart with sinful wine, beer, cheese and breads, you rationalize it's healthy, so that cancels out the negatives.”
Whole Foods does cater to a largely college educated “yuppie” clientele with incomes of $50,000+, clearly reflected in the pricey vehicles that crowd the parking lot, whether SUVs or hybrids. These so-called “foodies” - people interested in high-quality, gourmet foods and an overall organic lifestyle - are the main customer base for Whole Foods, accounting for about three quarters of all its sales. Indulgence and convenience often go hand in hand, which is why the typical Whole Foods now devotes two-thirds of its shelf space to more lucrative prepared foodstuffs –hence the derisive nickname “Whole Paycheck.”
Whole Foods also highly touts its corporate policy of earmarking 5% of net profits towards philanthropy each year. For instance, Whole Foods has been a top rung corporate sponsor of the Food for Thought Festival in Madison, WI. Each Whole Foods outlet can also donate to community non-profit organizations, with an obvious silver lining for company investors. As Mackay explained in an Oct. 2005 “Reason on Line” article: “In addition to the many thousands of small donations each Whole Foods store makes each year, we also hold five 5% Days throughout the year. On those days, we donate 5 percent of a store’s total sales to a nonprofit organization. While our stores select worthwhile organizations to support, they also tend to focus on groups that have large membership lists, which are contacted and encouraged to shop our store that day to support the organization. This usually brings hundreds of new or lapsed customers into our stores, many of whom then become regular shoppers. So a 5% Day not only allows us to support worthwhile causes, but is an excellent marketing strategy that has benefited Whole Foods investors immensely.”
In a March 8, 2005 USA Today article, Mackey lamented that “Americans love to eat. And Americans love to shop. But we don't like to shop for food. It's a chore, like doing laundry. Whole Foods thinks shopping should be fun. With this store, we're pioneering a new lifestyle that synthesizes health and pleasure. We don't see a contradiction.” While other grocery chains are downsizing, seeking to replicate the feel and appeal of the neighborhood “mom and pop” grocery, Whole Foods is unveiling 80,000 square foot “Super Size Me” behemoths costing $15 million. Within this decadent themepark one can almost imagine Walt Disney and Willy Wonka skipping down the aisles. Lucky visitors will be able to dip a fresh strawberry into a chocolate fountain ($1.59), have junior try on an organic cotton onesie ($14.00), get a 25 minute massage ($50), and even take home a vat of almond butter ($89.99) – all in a hard day’s shopping.
The new and improved 50,000 square foot Whole Foods superstore now in the works on University Avenue near Segoe Road in Madison, WI is modeled on a similar big box Whole Foods in Omaha, NE which boasts an in-house meat smoking station and a wine kiosk where customers can read reviews by Robert Parker simply by scanning the bottle. Other features that Whole Foods is banking will entice in even more well-heeled foodies into the fold include sushi bars, brick oven pizzerias, wi-fi hotspots, walk-in beer coolers, hot donut makers, and gelato stations.
With the skyrocketing popularity of organic – increasing by 20% per year – the organic USDA label no longer means “Grown in the U.S.A.” When a Whole Foods outlet opened in Pittsburgh, local organic farmers were told they could not sell to the store direct, but would have to negotiate with a regional warehouse as far away as Maryland. Though no official figures are kept on organic imports, the USDA estimated that over $1.5 billion worth entered the U.S. in 2002. Hapless organic supporters are now buying Chinese asparagus, New Zealand peas, and Mexican broccoli at their local Whole Foods outlet not realizing that their dollars are going elsewhere. Just like Wal-mart, Whole Foods’ interest in the wellbeing of workers and consumers does not translate into respecting their rights, especially when the bottom line comes first.
