Is Now a Good Time to Buy Whole Foods?

Some folks say it's hard to find anything cheap at a Whole Foods Market (NASDAQ: WFM  ) , but could the grocer itself present a relative bargain today? After a sell-off following a modest earnings report, perhaps now is a good time to add the natural foods store to your shopping cart.

Source: Whole Foods.

The market has an upset stomach
Over the past five years, Whole Foods has become a stock market darling. Despite offering a premium product in a tough economic environment, the grocer weathered the storm and returned more than 900% to shareholders in the process. The management team, led by co-CEOs John Mackey and Walter Robb, runs a fine-tuned operation that generates healthy 4% profit margins compared to a meager industry average of 0.7%.

As a result, the market expects bountiful revenue and earnings growth from the green grocer and nothing less. So when management remarked on a challenging environment during the first period of 2014, investors' appetites for shares of Whole Foods diminished. The stock sank 7%, and words like "rotten" and even "dreadful" were used to describe the company's results.

Just how dreadful were they? Whole Foods missed earnings expectations by two pennies per share and left something to be desired for this shareholder, but nevertheless failed to arouse feelings of despair. Instead, the latest quarter simply awakened investors to the idea that heady growth can only last so long. At some point, the low-hanging organic fruit gets picked, and even a rule-breaking company like Whole Foods will mature into a seasoned veteran. Co-CEO John Mackey noted that Whole Foods, in some respects, was finally confronted with "the law of big numbers" resulting in "a bigger cruise ship to try to steer."

As shown in the chart below, the signs of this maturation process are already showing. Whole Foods' same-store sales, a key retail metric, have tapered off in recent quarters. In other words, the Austin-based grocer is finding it difficult to hurdle a high bar at stores open more than a year. For the latest quarter, Whole Foods reported a same-store sales increase of 5.4% versus 7.2% in 2013.

Still, the gap between Whole Foods' performance and that of the rest of the retail or grocery industry is quite impressive. A quick calculation reveals that Whole Foods averaged 8% same-store sales growth during the 10 quarters shown versus a grocery industry average of 2.8%. The broader retail sector, meanwhile, turned in ho-hum growth of 2.4%.

A head above the herd
If Whole Foods' growth is slowing, it's still sprinting when compared to the industry at large. And its latest results did little to diminish its status as the natural foods category leader.

From an operational perspective, gross margins held steady at 35% of sales, and return on invested capital ticked up to 13.3% from 13.1%. The latter points to the company's ability to further leverage a highly trafficked existing store base.

Competition, meanwhile, is increasing from the likes of Sprouts Farmers Market and The Fresh Market, but demand for high-quality foods appears to be outpacing supply. Whole Foods remarked on its ability to open stores in previously unforeseen markets, from Alabama and Kentucky to the heart of Manhattan. The New York Times pointed out Whole Foods' success in smaller cities recently, and co-CEO Walter Robb described increasing opportunity even in tightly packed large cities: "[A]nother thing we're excited about is that ... we're able to cluster our stores closer together [in] these major metro markets ... we can put so many more stores than we ever dreamed we'd be able to put in 10 years ago."

As a result, Whole Foods once again upped its projected store count, this time from 1,000 stores to 1,200 nationwide. This would more than triple the size of its footprint, which stands at 373 today. By the end of 2014, Whole Foods aims to add 33 to 38 stores, increasing total square footage by 8% to 10%.

What will it cost to whet your appetite?
The long-term catalyst, then, appears to be growing demand and interest in a category it has dominated for decades: natural and organic foods. After all, Whole Foods is America's first national Certified Organic grocer and the biggest player in what has historically been a niche market. Now, that niche market is evolving.

Over time, Whole Foods is working to bridge the gap between what is considered specialty and mainstream in groceries. Management spoke to this point when describing "pricing investments" made to bring prices more in line with everyday competitors like a Kroger or Wegman's, for example. These efforts will depress same-store sales in the near term due to a smaller ticket price for the same shopping cart. In the long term, however, the company can gradually shed the moniker "Whole Paycheck" as shoppers see more reasonably priced fare.

To make this happen, Whole Foods might sell more conventionally grown produce, for example, but by no means does this imply fading demand for organic products. If anything, consumers are growing more concerned about the origins of the food on their plate. As a result, they're more willing to pay up for, say, pasture-fed beef or organic olive oil.

From my perspective, then, Whole Foods is sitting at the center of a burgeoning market that could soon go mainstream. For higher-quality foods and transparent supply chains, Americans seem more willing to pay a premium. That premium, however, is not too abnormal, historically speaking. Consider the fact that the average American spends about 11% on food and drink today, down from 18% in 1967. Collectively, we're starting to make the connection between a downward trend in food prices and health care costs that have ballooned from 8% to 18% of our budgets over the same time frame. It seems that more and more people are debating whether the savings at the register are worth the consequences of increasing levels of nutrition-related illnesses like diabetes.

As we become more attuned to preventative measures like evaluating the health and nutrition of the food we consume, companies are catching on to the trend. According to a recent study by Deloitte, 79% of the top brass at leading food and beverage companies cited "health and nutrition" as one of the most important issues facing the industry today.

Key Food and Beverage Industry Issue

 Percent of Executives
Citing Its Importance 

Health/nutrition

79%

Convenience

66%

Price/growth pressure

54%

Regulation

54%

M&A/consolidation

52%

Source: Deloitte Food and Beverage Study, 2012.

While other companies are waking up to this trend, however, Whole Foods will keep humming along, improving on the work it's been doing for more than three decades.

Foolish takeaway
Looking ahead, it's hard to imagine Whole Foods losing momentum as it disrupts the estimated $522 billion supermarket industry. Double-digit growth might be harder to come by, but every year the addressable market expands. After Thursday's decline, Whole Foods trades at a forward price-to-earnings ratio of 26 versus a market average of 15. For a company at the forefront of the fast-evolving grocery industry, that's a premium I'm willing to pay.

Is Whole Foods a top stock?
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Read/Post Comments (22) | Recommend This Article (18)

Comments from our Foolish Readers

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  • Report this Comment On February 14, 2014, at 12:21 PM, todamo13 wrote:

    As crazy as this might sound, I think we have Monsanto and the other GMO/pesticide companies to thank for supercharging this increase in demand for good, real, food. Monsanto's behavior has become so outrageous that the general population has finally been pushed to stand up in outrage.

    People may start with learning about GMOs and wanting to avoid them (and somehow fight Monsanto), but from there they learn about pesticides, confined animal feeding operations, the destruction of our farmlands, and all the other disease-causing and environmentally-devastating aspects of the conventional factory-farming / synthetic chemical / GMO agricultural industry.

    Whole Foods will benefit from this wave of people suddenly caring about where their food comes from, how it's raised/grown, and what's in it. And once you care about these things, you're not going to go back to buying cheap junk food (even if it is cheap). You may realize that good, nutritious food is a more important investment than, say, a multi-hundred dollar a month cable bill or cell phone data plan.

    In other words, I think the future looks fine for Whole Foods!

  • Report this Comment On February 15, 2014, at 2:02 PM, cmalek wrote:

    @todamo13:

    There have been no reliable, UNBIASED studies done that prove whether GMOs are or are not harmful. We only have hysterical jeremiads from people like you who dislike Monsanto et al. If you don't want to invest in them, that is your business. If you have so much extra money that you can afford to shop at Whole Paycheck, good for you. But I and millions of others have to feed our families on what we can afford and we certainly cannot afford Whole Paycheck.

  • Report this Comment On February 15, 2014, at 3:32 PM, Tom1758 wrote:

    I think one aspect of whole foods that does not get reported much is the social connection. I see a lot of friends colleges and people I would like to meet while shopping there. It makes sense to me that it is a place to strengthen and create social bonds.

  • Report this Comment On February 15, 2014, at 4:33 PM, wtatm wrote:

    Isaac,

    A very interesting and thought-provoking article on a fascinating company. However, I do challenge the following statement:

    "Consider the fact that the average American spends about 11% on food and drink today, down from 18% in 1967. Collectively, we're starting to make the connection between a downward trend in food prices and health care costs that have ballooned from 8% to 18% of our budgets over the same time frame."

    I think it is a stretch to blame the more than doubling of the average American's healthcare expense on the quality of the food chain. As a health insurance actuary who has been in the business since the late-1970s, I would cite the following (in no specific order) for the increase in health care costs from 8% to 18% of America's budget:

    ~ Aging. The lead edge of the "baby-boom" generation was 21 in 1967. They are 68 today. Healthcare for seniors is much more expensive than for 20-somethings.

    ~ Increase in longevity. The medical profession has made more breakthroughs in cardiac care over the last 45 years than in the treatment of any other major disease. For this I am very grateful. This has increased longevity by about 5-7 years. However, it also has made the incidence of cancer... a disease largely related to aging... much more prevalent. Cancer is also (usually) much more expensive to treat than heart disease.

    ~ The increase in legal fees in the health care system. In some states, legal costs consume 25% of total healthcare premiums. People are suing today for alleged "malpractice" at much higher rates than 45 years ago. This has also led to an increase in "defensive medicine" by doctors.

    ~ Although the quality of food consumed certainly has some impact on health costs... I suspect the quantity of food being consumed today has had a far larger adverse impact on health.

    Thanks again for a good article.

  • Report this Comment On February 15, 2014, at 7:39 PM, MEDSNMN wrote:

    I like Kroger better than Whole Foods overall when shopping. I must note that the CEO of Whole Foods is on the Board of Motley Fools. Isn't this a conflict of interests for evaluating grocery store chains?

  • Report this Comment On February 15, 2014, at 7:58 PM, physicsisphun wrote:

    My thanks to a couple of folks (cmalek and wtatm) who injected some scientific realism into this discussion. The concern about GMOs is, from a scientific perspective, nuts. And from a statistical perspective, I greatly appreciated the careful analysis from wtatm. I agree this was an interesting and useful article, but let's avoid clouding the issues with a bunch of hysteria about things that are just wrong. (Next thing, I guess folks will start blaming the vaccine companies for autism again?) The food we have available in this country is, frankly, a marvel. There are a good number of folks who have enough income that they can spend "8%" at a place like Whole Foods for organic, gluten-free, range-fed corn (that was a joke!), but I'm glad to hear that WFM is starting to focus a bit on price, even at the expense of revenue growth, because there are a lot *MORE* potential customers who find their current prices far too high. I think the analysis given is right that this should be viewed in a very positive light, as far as the future of WFM is concerned.

  • Report this Comment On February 15, 2014, at 10:57 PM, RondoAZ wrote:

    I shop at Whole Foods regularly. Very picky and specific, since I am parsimonious due to budgetary constraints. Typically, WFM vegetables are poorer quality and much more expensive than, say, Publix. The seafood is outrageously expensive and they have to move it along - but I buy it when I want it - never the $30/lb. stuff. Meat and Poultry excellent, and buy on sale. Salad bar almost daily (no dressing or weighty add-ons to save $. Coffee in my own cup. Cheap wines are good quaffers. Else, not spending much there.

    People usually excellent - so service great.

    Was good buy in the 40's. Getting close again.

    They don't suffer from success as other companies seem to: godawful - Panera (dirty, poor service, increased prices for bad service dirty, and reduced quality of products - at places from east coast to west coast - not a one-off. Also, recent visit to BWLD was disaster - filthy, stupid 4 leg stools fall over with touch of foot, filthy (can't say that too much) argued with me when I asked for a non-chilled glass for my beer; entree protein was luke warm to cool, fries not as good as frozen Ore Ida baked at home, service lousy (took 5 minutes for flatware and napkins after asking after food served and picked up a "menu" for drinks and immediately grabbed for handi-wipe - YUCK! What a dump (opened about 1 year ago???). OH, and let's not forget the least interesting, possibly worst effort at "Mexican" food - Chipotle! You kidding me? Twice was all I can handle. First time I tried to be friendly and put it up to a newer store. Second time same crappy food, and not as nice an ambiance as McDonalds. That said, the people were polite... which doesn't make it investable.

    Just got me goin' with these darlings (presumably of upper east coast throw it in your face food joints) of the market. Mr. Market doesn't eat out much, I guess.

  • Report this Comment On February 16, 2014, at 8:23 AM, PeterVanKan wrote:

    Those that deny the danger of GMO crops, are either paid by GMO companies, totally ignorant, unwilling to face being on the wrong side of history or part of the crowd that equals caring about the planet to being liberal and therefor an unpatriotic socialist. How blind can one be ?

  • Report this Comment On February 16, 2014, at 12:17 PM, exileonmainst wrote:

    As a species, we've been GM'ing organisms for thousands of years. I've got the roses in my back yard and a good dog lying on the floor to prove it. With regard to Whole Foods as a stock, too expensive by a long shot. As a business, they may be a first mover in the trend for 'better' food but pretty much everybody catches up as the food that sells scales up on the growing, processing and manufacturing end. As a store, too expensive for the average joe who's not trying to be a Newport Beach wannabe. For my money, go to the Super King: high turnover of veggies and fruit so the price is always right and product fresh, kosher or halal meats and plenty of selection for the Med diet. Fill in with Costco or Sam's. As a social meeting place, I remind you of a certain scene from Animal House.

  • Report this Comment On February 16, 2014, at 1:01 PM, TMFBoomer wrote:

    @todamo13

    Thanks for the comment.

    Regardless of where you stand on GMOs, pesticides, CAFOs, organics, soil erosion and tilling, local products, etc., I think we can all agree the list of food-related concerns is long, complicated, and far from resolved.

    With this in mind, I agree with you that the assortment of concerns will make people more curious about their food supply. Secondly, I believe the more complicated it gets, the more we'll turn to knowledgeable, trusted parties for advice or guidance. Personally, I can't decipher the endless studies and labels, but I can trust a grocer like Whole Foods that's evaluated the food supply because that's the business that they're in.

    In short, I agree that Whole Foods will benefit from a wave of increasingly concerned food consumers.

    @wtatm

    I appreciate the insightful comment. It is a stretch to attribute a huge portion of rising healthcare costs to the quality of the food supply chain. I still believe there is a causal relationship there, however, and perhaps it’s due more to quantity than quality as you pointed out.

    The broader point was that we spend far less of our paychecks on food today than we did forty years ago, and we spend less per capita on food, as a percentage of income, than any other country in the world. All of the data on this is available on the USDA website (http://www.ers.usda.gov/data-products/food-expenditures.aspx...

    If you take the effects of a dramatic decline in smoking out of the picture, however, we’re no better off health-wise today than we were decades ago…Even though we can afford better food.

    Further, I think perspective is needed when we talk about spending a “whole paycheck” on groceries. But that's a different point from your comment, I realize.

    Thanks and Fool on!

    Isaac

    @TMFBoomer

  • Report this Comment On February 19, 2014, at 4:01 PM, dsciola wrote:

    Interesting article Isaac. Cpl quick thoughts and questions...

    "The management team, led by co-CEOs John Mackey and Walter Robb, runs a fine-tuned operation that generates healthy 4% profit margins compared to a meager industry average of 0.7%...

    ...latest quarter simply awakened investors to the idea that heady growth can only last so long...Co-CEO John Mackey noted that Whole Foods, in some respects, was finally confronted with "the law of big numbers" resulting in "a bigger cruise ship to try to steer...signs of this maturation process are already showing...For the latest quarter, Whole Foods reported a same-store sales increase of 5.4% versus 7.2% in 2013.

    Management spoke to this point when describing "pricing investments"...These efforts will depress same-store sales in the near term due to a smaller ticket price for the same shopping cart. In the long term, however, the company can gradually shed the moniker "Whole Paycheck" as shoppers see more reasonably priced fare."

    So the way I read all that is 2 major potentially negative new normals for WFM...slowing SSS growth along with compressing margins...slowing growth due to maturation process, compressed margins due to increased competiton and shedding the 'Whole Paycheck Moniker.'

    Though I like the 'story' surrounding WFM and it's industry leadership, I wonder if the fact that at the end of the day the company is selling a commodity, food, will bring its SSS growth and margins, and thus valuation, back down to earth...specifcally, down to that market (industry?) average multiple of 15...and thus also further to fall for the stock price.

    Your thoughts? would be curious to hear more.

    Also...if u don't mind me asking...

    1 - what comps did u compare WFM to in the retail and grocery industry for the SSS graph?

    2 - what 'leading food and beverage companies' responded to that Deloitte study?

    3 - $522mm supermarket industry...is that in the US or globally and how'd u arrive at that number?

    Thanks so much! Really enjoyed the article.

    Dom

  • Report this Comment On February 21, 2014, at 7:09 PM, cmalek wrote:

    @PeterVanKan:

    I very much resent your implication. All I asked for is a name of a reliable, unbiased study that either proves or disproves the danger of GMOs. I, unlike you, am willing to be shown the facts.

    Have you ever heard of the "scientific method" or are you Luddite True Believers who "knows what he knows and does not want to be confused with facts?" Based on your diatribe it seems you are the latter and the only studies you would believe are the ones that reaffirm you beliefs. If God himself told you are wrong, you would call Him an agent of the GMO lobby.

  • Report this Comment On February 21, 2014, at 7:33 PM, whyaduck1128 wrote:

    Will the likes of this puff piece on behalf of the company headed by your new board of directors member be standard for The Fool from here on out?

    If so, let me know and I'll gladly bow out, no matter how much I like the people here and how much I regularly learn. I have no patience with ostensibly objective people serving as shills.

    And if you're going to write about companies whose CEOs have significant ties to your organization, IMO the place to disclose such ties is AT THE BEGINNING of the article, so we can save time by deciding whether to read it or not.

  • Report this Comment On February 22, 2014, at 3:44 AM, 650nm wrote:

    @cmalek

    The proof or disproof of the dangers of GMOs may not be that straightforward. See for example the complex relationship between neonicotinoid pesticides used on modified corn (which can withstand higher doses of said pesticide) and Colony Collapse Disorder.

    In http://news.mongabay.com/2012/0405-hance_colonycollapse_pest... , the concept of using LD50 as a measure of toxicity is pointed out as flawed, since affected bees had ample lifespans, but simply couldn't find their way back to the hive.

    We've all heard the arguments that the large corporations have made about the benefits of GMO crops. But remember that they are corporations and their goal, as with even WFM, is to turn a profit. Make no mistake, they will do whatever they can to make the most money with the least effort or expense, even if that expense is huge. World-saving reasons are simply a nice cover for the market they are milking.

    WFM also is doing its best to turn a profit, by charging what the market will bear, but at least they're doing it with known-good products and it's not like they would sue you for growing your own organic tomatoes. Don't like them? Don't shop there.

  • Report this Comment On February 22, 2014, at 12:33 PM, parrotwallace wrote:

    I don't shop at Whole Foods, although they do sell some of my products that they purchase thru distributors of mine.

    The last time I was in a Whole Foods was in Boulder, several years ago when i went to one of their vendor fairs that familiarize team members with new products. I was shocked by the pricing I saw, and basically walked out with a gallon of water and some bulk granola.

    Whole Foods puts out a message of being friendly to small companies - which is patently false -the first thing they do is ask for free goods to get on the shelf. When you are a small company, and not a manufacturer, it can take the profits of tens of cases of product to offset the charge from the distributor for the free goods. The distributor - eg: UNFI - charges you at wholesale prices, because they aren't going to sacrifice their profit - that is up to you as the supplier.

    Needless to say, it makes it very expensive, or impossible, for small companies to do business with them, and be profitable, if they do not have deep pockets for these 'marketing' expenses.

    Since Whole Foods does pay cost plus for almost everything, and then charge at least the full retail price, their margins should be higher, or they could actually charge less, and still maintain above average margins - but they choose to not.

    In fact, many regional buyers have made it clear to food brokers that if they do not participate, by sending people, to assist in re-setting stores, usually several times per month, they can forget about any face time with the buyers - truly an ethical way to do business - IMHO

    Needless to say, I do have a bias against the company, and while I am not really happy that John Mackey sits on the board at Motley Fool, I expect that the next time Whole Foods stock takes a nose dive, I may just buy some.

  • Report this Comment On February 22, 2014, at 12:51 PM, SkepikI wrote:

    <Management spoke to this point when describing "pricing investments"...These efforts will depress same-store sales in the near term due to a smaller ticket price for the same shopping cart. In the long term, however, the company can gradually shed the moniker "Whole Paycheck" as shoppers see more reasonably priced fare.">

    These MF articles on WFM have never to my knowledge bothered to price check in any meaningful way, even anecdotally. This is a very serious oversight in the analysis IMO, and it is a blind spot where WFM is concerned that runs across the MF spectrum. TMF Lomax has it as well.

    It is OK with me that WFM, the Tiffany & Co of the grocers gets top prices from the BMW and Volvo set that frequents their stores to socialize. Or whoever their demographic is (go ahead and slam me for that gratuitous comment).... I don't degrade them for it, in fact I admire their ability to have it both ways: price high and skim off the well heeled or paranoid market, and be lauded as good people for the same practical execution that other big corps are shredded for. BUT, the MF analysts are doing their readers no service at all if they ignore the risk this sort of strategy presents to the point of not admitting it exists at all. Serious blind spot.

    My own anecdotal price comparisons (yes I shop WFM occasionally) are nothing short of stunning to me. Yams- WFM $1.99/lb New Seasons (local private competitor) $1.79/lb Kroger $.79/lb WINCO $.49/lb. Similar price spreads for Russet Potatoes. Dungeness Crab WFM $9.99/lb New Seasons $6.99/lb WINCO $4.98/lb! Jeez they come from the SAME OCEAN and the same fishermen here!!!

    I could go on but this is the most serious blind spot I've found in my brief time with MF. And I can ascribe it to the CEO being on the MF board because it started long before.

    I will say, I have seen very few articles and LOTS OF COMMENTS on MF critical of WFM. This speaks to unfettered bias in MF analysts, editors and management.

  • Report this Comment On February 22, 2014, at 12:54 PM, SkepikI wrote:

    ^ Sorry, I meant " I CAN'T ascribe it to the CEO being on the MF board because it started long before" To fast on the post button to edit....

  • Report this Comment On February 22, 2014, at 8:53 PM, rhines81 wrote:

    Per the question posed by the title of this article -

    NO, Now is NOT the time to buy WFM - most likely a proper buying time will be another 4-6 weeks away - keep an eye on the technicals.

    Right this second and on Monday morning is definitely NOT the time to buy.

    As for comments on GMOs, right or wrong, whether or not PeterVanKan is a brainless liberal Obama supporter or not - this is not the place for those discussions. :)

    Peace

  • Report this Comment On February 23, 2014, at 10:54 AM, shoesnsocks wrote:

    As a person who was incorrectly diagnosed with multiple sclerosis in my early 20s, I am now 60, I shop at WFM regularly. I don't have MS I have a huge problem with candida and the symptoms present he same. As a result my diet is key to my health so I shop at whole foods. Thirty years ago whole foods was the only place to go for organic foods. Now there are more choices so I do shop around.

    But speaking from experience the people who say that pesticides,etc, don't matter have probably never had a health issue. Everything yo put in your mouth affects your health. People with cancer, autoimmune diseases, etc. shop at whole foods because the quality of your food so heavily effects your health and you can pretty well depend on whole foods to be consistently rigorous in that area.

    Our current food supply is a mishmash of chemicals that don't occur in nature and our bodies cant handle them. Hence the rise f glutin free foods,etc. if you do nothing else I urge you to only eat organic free range chicken and beef. If you've ever boiled a chicken from Kroger and then one fron whole foods you know what im talking about.

  • Report this Comment On February 26, 2014, at 3:28 PM, kevinjm101 wrote:

    @exile Genetic engineering (genetically modifying) our food is not something we've been doing for thousands of years. Your dog wasn't genetically engineered to be a fine pet, he was socialized and domesticated.

    As for your roses, you're confusing breeding with engineering.

    Please look up genetic engineering.

  • Report this Comment On February 26, 2014, at 8:46 PM, SkepikI wrote:

    ^ No and neither is it the next incarnation of evil. Its not exactly spontaneous mutation or environmental mutation either, but more targeted and specific. Which just might make it LESS risky than the random methods relied on to get the components used in "breeding".

  • Report this Comment On March 12, 2014, at 9:22 PM, TMFBoomer wrote:

    @dsciola

    Dom,

    Thanks for the comment and sorry for the delayed response. I actually lost power in the middle of responding to your comment. What are the odds? So, my thoughts on your inquiries:

    <<I wonder if the fact that at the end of the day the company is selling a commodity, food, will bring its SSS growth and margins, and thus valuation, back down to earth>>

    Whole Foods is trying to broaden its customer base by offering more conventional produce at lower prices. I don’t think that means it’s simply selling a commodity like everyone else. To a large extent, Whole Foods is selling an ‘experience’ that no other store has been able to replicate.

    As a case in point, take a look at its newest hometown store in Austin (http://www.kvue.com/home/New-Whole-Foods-offers-sneak-peek-i...

    “It features an outdoor beer garden with a stage for live music, a children's play area and 11 seating areas to relax and enjoy a quick meal.”

    I’ve been to its flagship store and spent many years in Austin and I think this new one will resonate with Austinites. And it shows that Whole Foods is really focused on offering something more than a typical grocery shopping experience. Who knows, maybe a live music venue will start popping up at Whole Foods stores around the country.

    Secondly, I don’t think Mackey & Co. ever got started in the business to sell a commodity. If anything, they’re pulling the grocery industry away from that mentality. More and more grocers are finding ways to “value-add” to the product and the retail experience, whether it’s through private labels or in-store cooking lessons, coffee bars, food stations, etc. I would imagine the food industry on the high end becomes less and less commodity-like.

    1 - what comps did u compare WFM to in the retail and grocery industry for the SSS graph?

    Here’s the comp sales data from AlixPartners. They send it out monthly and it’s worthwhile if you’re interested in retail.

    http://emarketing.alixpartners.com/reaction/images/2014/pubs...

    2 - what 'leading food and beverage companies' responded to that Deloitte study?

    I couldn’t find exact companies, but here’s what Deloitte states –

    About this report:

    Interviews were conducted in 2007 among 93 top-level executives at leading food and beverage companies in Europe, Middle East, and Africa (EMEA) and the Americas (61% manufacturers and 39% retailers and food service companies).

    https://www.deloitte.com/assets/Dcom-Spain/Local%20Assets/Do...

    3 - $522mm supermarket industry...is that in the US or globally and how'd u arrive at that number?

    http://www.ibisworld.com/industry/default.aspx?indid=1040

    I use IBISWorld for market research on retail/groceries. Should include all US food and beverage, even that sold at non pure play outlets like Costco, Wal-Mart, etc.

    Isaac

    @TMFBoomer

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