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Whole Foods Smells Weakness, Buys Wild Oats
Whole Foods, the Wal-Mart of organic and health food, announced yesterday it will acquire rival chain Wild Oats for $565 million.
Whole Foods made the decision to pursue Wild Oats after the chain suffered a debilitating sequence of mishaps in late 2006. In November, Wild Oats' CEO resigned over contract disputes, and the company closed 8 underperforming stores. The cost of the closings was more than $25 million, and Wild Oats' CFO resigned in December.
"I thought, gosh, maybe this would be a good time to approach Wild Oats," said Whole Foods' CEO/Founder, John Mackey. Mackey said the acquisition deal with Wild Oats' interim CEO, Gregory Mays, came together in a matter of weeks.
Currently, Wild Oats has 72 stores in 22 states. Whole Foods has 193 stores in 32 states, the U.K., and Canada. Despite Whole Foods' commitment to the environment, organic goods, and animal rights (they recently stopped selling live lobster except in Maine), the company has been vocally criticized for their flat denial to provide a worker's union. CEO Mackey memorably compared unionization to herpes, saying: "It doesn't kill you, but it's unpleasant and inconvenient and it stops a lot of people from becoming your lover." Whole Food also imports much of its organic produce.
Whole Foods most recently opened stores in London, Brooklyn, and Portland, Maine, and a huge new store in New York City's historic--but rapidly gentrifying--Lower East Side, on a spot formerly occupied by one of the city's largest Jewish theaters.
--Jennifer Phillips
They don't want to unionize because it hinders a "team" work environment. Many progrssive companies eschew uninonization.
It should also be noted that CEO John Mackey takes a salary of $1 per year.
The fact that Whole Foods is one of the top 5 companies in the US to work for is important. Wal-Mart treats its employees like dirt; Whole Foods treats its employees with respect. A non-union workforce with strong relations to management is just as good for the workers as a unionized workforce constantly fighting with management.
I agree with Rob, Whole Foods is a great company, a great neighbor, and a great employer. Whole Foods offers a two tier buying program that enables local stores to work with local vendors. This allows small start up companies to compete with National Brands. These local companies employ locally, produce locally, and revenue generated by sale of their product goes back locally. Also Whole Foods allows local vendors access to their regional distribution system. This access allows a small vendor to get their product into more than one store in a region. The by-product of this is less fossil fuel being burned by small companies driving around to individual stores delivering one or two cases at a time. Take a look at all the great products featured in a Whole Foods and then imagine how many delivery trucks were eliminated by Whole Foods allowing one truck to deliver those products. And speaking from experience the retail price that you see at Whole Foods is a value. If a product is priced too high it will not sell and in the perishable food segment this benefits no one. Whole Foods has very strict criteria when you submit your product for consideration. When you purchase your products at Whole Foods you can be assured that they have looked at the method used to produce the product, the ingredients used and whether the vendor is giving back. The "giving back" is not marketing for Whole Foods it is the way they do business!