Whole Foods (Nasdaq: WFMI) can justifiably be called an innovator. The company has made organic foods into a large-scale, highly profitable business, delivering shareholders oodles of wealth in the process. Now it's blazing a new path once again. Getting its latest concept off the ground will be no mean feat, but if Whole Foods can manage it, the profit potential is enough to make anyone's mouth water.
The Austin, Texas-based grocery chain outfit is going to launch a different sort of store in West Hollywood, Calif., in October. Rather than selling the company's usual fare of all-natural foodstuffs, the new concept will tout organic and environmentally friendly clothing and housewares, world music, and books and magazines concerned with sustainable living.
Whole Foods' plan to diversify may worry some observers. After all, the best companies tend to concentrate on their core businesses. We're talking about a grocer here, and everyone knows selling food is a lot different from selling jeans and curtains.
Still, Whole Foods may not be so out of bounds in testing these new waters. In its operations, the company emphasizes that it takes principles like healthy living, social responsibility, and eco-friendliness to heart. Its efforts in this vein extend way beyond selling food grown without potentially harmful pesticides or hormones. Whole Foods stands out by providing employees with health benefits and a 401(k) plan and paying them for community service. In addition, several of the firm's stores run on wind or solar power.
Whole Foods has gone to great lengths to make its brand synonymous with a lifestyle -- and lifestyle brands can be quite versatile. Starbucks (Nasdaq: SBUX) has leveraged the Seattle-cool image it developed in the coffee trade to sell a variety of other items, including appliances, tableware, and music. Like the local Starbucks, Whole Foods markets have become community anchors by offering juice bars and mini-eateries alongside their grocery aisles.
But the Whole Foods-Starbucks analogy can be pushed only so far. While Starbucks used its existing locations to hawk new items, Whole Foods will create an entirely different store. Launching a new stand-alone venture is a bold move. But the potential rewards seem to justify the risk.
For more on Whole Foods:
Whole Foods is a
Motley Fool Stock Advisor
recommendation. Want to find out what other stocks are on David and Tom Gardner's minds? Click here to take a free trial.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
Terms & Conditions
RSS Headlines
Fool UK