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Why Was Whole Foods Successful Initially?

By Ferdi Vol
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Whole Foods’ popularity emerged from its high-quality sales of organic and all-natural food. They were known to always have customer satisfaction as their central focus. But ever wonder how that reputation shifted? So why was Whole Foods successful initially?

The initial success of Whole Foods came because the founder and CEO of Whole Foods, John Mackey and another founder Renee Lawson Hardy decided to promote sustainable agriculture products for groceries. This attracted several customers and led to their initial success in the market.

The founders and workers of Whole Foods were very determined about their target, although, there were challenges they faced when they took off. In this article, I mention some compelling facts about the success of Whole Foods- the transition from being called hippies owned company to a multinational. I also share a few facts about what led to its downfall at one point.

Whole Foods Rise to Popularity

In the late 70s, Whole Foods started as a small store in Austin, Texas. The store was just as big as a 7-11. Even in 1998, the chain had 5 stores. Whole Foods was successful regionally and locally as soon as they opened back in 1980.

Whole Foods filled a gap in the market and initiated a wide range of sales of organic and natural products. But they gained popularity as a whole from the 90s. This was the time when people became conscious about the food they put into their bodies and wanted natural and organic produce. Thus, by 1993, they gained popularity all over the nation.

The popularity emerged well after Whole Foods went public and started to expand their business in different cities in the country.

People were fine with paying for it as most conventional stores at that time did not have natural nor organic products. Besides Wild Oats, Whole Foods was the only one offering that for the customers.

The founder and currently the CEO of Whole Foods, John Mackey, grew this brand. It then expanded from being a small humble store owned by hippies in Austin, Texas to a large brand with about 500 stores. 

Besides the selling of organic and natural items, Whole Foods also made shopping a good experience for customers. They combined supermarkets and health-food stores. As time went by, many customers kept coming back and new ones too, even though its unique items were expensive.

Whole Foods started the trend on organic food and all-natural food stores and the entire market abided by it with much acceptance. But besides that, they also bought smaller health stores which contributed to exposing their brand further and became more popular.

How Did Whole Foods Start the Organic Revolution?

Organic produce these days is not hard to find. It is quite known with the farmers' market being so popular all over the country. Thousands of farmers every week offer their fresh produce, vegetables, fruits, and even meat.

However, organic items were not easy to come by back when Whole Foods was getting established. The late 70s did not offer this particular sector and thus, Whole Foods emerged quite gracefully, taking full advantage of the gap in the market. They took the opportunity and capitalized on the changed idea and behavior towards local agriculture.

Ever since it began, in 1978, it was a health food store and it became one of the largest organic food markets in the United States. They have a huge role to play in the awareness and growing popularity of locally produced food and organic produce.

Their start-up was like any other ordinary new business. It started like every other owner with a target, a loan, and the will to exhibit their dream to the world.

Initiation to Organic Revolution: 1980 – 2002

In Austin, Texas, back in 1978, John Mackey and Renee Lawson Hardy founded SaferWay Natural Foods. Two years later, in 1980, it became Whole Foods.

During the time of SaferWay, the nature of commercial food buying and selling was going through a change. There was rapid growth in the economy. Customers became more familiar with frozen and packaged foods that were sold in the supermarkets. As the popularity grew, new companies formed, each bigger than the other.

On the other hand, both the founders of Whole Foods were young and in their mid and early twenties when they opened SaferWay. They borrowed money from their family and friends to start the business. SaferWay then merged with Clarksville Natural Grocery and became Whole Foods in 1980.

Mackey and Lawson Hardy’s plan since the very beginning of SaferWay was to change the way people thought about obtaining food. Instead of putting concentration on the prepackaged vegetables and fruits that came from commercial farm industries, they associated with local farmers in Austin.

For Mackey and Lawson Hardy, this idea of promoting agricultural produce and organic food was a life changer and needed to be taken further. It was the sole identity of what they were dreaming to make Whole Foods.

The design of Whole Foods was to reinforce authenticity. The farmers used to come with their pickup trucks with carrots, tomatoes, beets, and all kinds of vegetables and deliver them to the store. The store was all about genuine marketing and the acceptance of natural goods, almost opposite of what the supermarkets in the big cities offer.

However, the start-up soon faced huge difficulties on its way due to the flood in 1981, on Memorial Day. The city of Austin was laid to waste and with some deaths in the city, the estimated damage was 35 million dollars.

The store went down to eight feet of water, which ruined the inventory. Without insurance, and damages that went above four hundred thousand dollars, the store suffered to even get the power back up. It put the two founders in a condition that made them question their dream and decisions.

However, the flood could almost be the best thing to have happened to Whole Foods. The neighborhood and the community members came to aid the store and to save it from shutting down. The locals helped in cleaning and even the vendors gave Mackey and Lawson time to sort things out. After 28 days of the flood, Whole Foods reopened.

Mackey and Lawson Hardy's vision to build a community that supports natural produce finally came true. The locally-owned brand, as per the founders, tied the community together to save their own. And before time, within a year, Whole Foods made a vital stand in the community as an established organic marketplace.

In 1984, Whole Foods expanded and opened its second store in Houston, Texas. They appointed about 600 employees. After Houston, they opened in Dallas, Texas. In 1988, Mackey approached venture capitalists to invest in Whole Foods, as they aimed to take their company beyond Texas.

Many VCs turned them down while one also called them “a bunch of hippies selling food to other hippies” and underestimated their marketing strategy.

Nevertheless, Whole Foods finally made it out of Texas and opened its sixth store in New Orleans. By 1992, they operated from Austin to Wall Street. And that is when their market went public. As they kept growing, even though they were still small compared to the mainstream supermarkets, Whole Foods grew and eventually surpassed 1 billion dollars in 1996.

Increasing Success: 2002 – 2012

Whole Foods had a fiscal sale of almost 2.7 Billion dollars by 2002. They opened their first store in Toronto, Canada - the first store outside the United States. And then onwards, the growth in the company was faster.

By this time, organic and ethically produced items were becoming common in conventional supermarkets. And as that happened, people shifted to the ethical and sustainable manners of shopping. Mackey’s idea of “conscious capitalism” took birth as the movement to organic food started to become the new normal.

Whole Foods got so established that the general grocery chains could not compete with it. They had various ethical and environmentally friendly activities that were followed as crucial parts of Whole Foods' identity. Mackey considered both by this time- organic and authentic produce as well as contemporary modern supermarket strategies.

Besides selling organic produce, Whole Foods introduced brick-oven pizzerias, in-store cafes, and restaurants, as well as luxury spas. This was to attract socially aware shoppers. The leaving responsibility was to make the new generation aware of the sole idea of Whole Foods' founding- promotion of a healthy authentic lifestyle.

By 2012, Whole Foods achieved 335 stores in the United States, United Kingdom, and Canada combined with a net sale of 11.7 billion dollars. The company had 11 quarter growths within these years.

What Other Reasons Led Whole Foods into Becoming Special?

Whole Foods has been popular for selling all-natural items. Other than that, they also banned products that contain artificial flavors, colors, and preservatives. However, selling organic and natural products is not a new thing these days, lots of stores offer that. But what makes Whole Foods special is the care it had for the customers.

There are some standards set by the U.S Food and Drug Administration- FDA, but Whole Foods has gone beyond that. They have their list of ingredients that they do not accept in their goods. Nevertheless, the prices tend to be higher as they are picky about their ingredients.

Whole Foods stopped using plastic bags in 2008 even before the trend of being eco-friendly was common. They also prohibited the selling of products that were tested on animals.

They had a product rating scale with the colors green, yellow, orange, and red. Whenever products tested red, they did not sell it. The scale indicated if the product will impact the environment, whether it is safe, is from a good source, or has animal testing.

Whole Foods was expensive but they were growing bigger and greener- their eco-friendly marketing strategy took them far. Whole Foods installed solar power – photovoltaic panels in 2002 and were the first national food retail company to do so.

In 2004, they were awarded Green Power Leadership Awards by Environmental Protection Agency to have been a committed company to contribute to sustainable energy. They also cared about protecting the forest and thought about reducing carbon footprints.

These initiatives they took ensured customer loyalty and made them popular and special among others.

When Did Whole Foods Start to Decline?

After 32 years of success in the grocery industry, the year 2012, marks the start of a fall in Whole Foods’ brand. The reputation started to spread of Whole Foods being so expensive that they can take over the entire paycheck, according to customers. They nicknamed the store – Whole Paycheck.

Whole Foods had neglected the other rules and components of business while they were only focusing on growth and spreading their motto. Whole Foods' success led to the birth of competitors who made organic produce their main method of profit as the market grew. Down costs increased as supermarkets started to push organic produce to a greater extent.

As other competitors were not as expensive as Whole Foods, the brand's unique proposition was no longer theirs alone. They were in the limelight to now reduce the cost to compete with other stores that were now winning over them.

Whole Foods had inspired the other grocers and became the victim of their success. The company believed they would be able to continue their name as the organic giant if they just open new stores. However, it was not possible anymore.

Nevertheless, Whole Foods continued to put money into the environmental causes that kept their superiority in the 2000s.

In 2014, the company started accepting Apple Pay as the paying method to engage young shoppers. They also initiated a partnership with Instacart where they assured delivery within one hour in 15 metropolitan areas, but it was an initiative that could not make much difference.

In the same year, Whole Foods started an advertising campaign nationwide of unparalleled scale for their company. Through this campaign, they wished to defeat the nickname the store earned as a – Whole Paycheck store, trying to show that their pricing seals their quality products.

However, they were wrong, as competitors like Walmart and Costco became huge organic markets that sold cheaper organic fruits and vegetables while maintaining quality.

Mackey and Lawson Hardy's view of creating an industry for organic agriculture did come true but the chain could not keep their position in the same place they took off from. They underestimated the importance of pricing and how it may impact them in the long-term.

In 2017, the chain closed 9 stores across the U.S. Even after that they continued to support ethically sourced food but their retail ideas were no longer up to the mark. Later, it was declared that Amazon bought Whole Foods for 13. 7 billion dollars.

There was an unfortunate turn of events for Whole Foods- from being the leader in the grocery retail market to a chain trying very hard to catch up. Whole Foods was successful in promoting a healthy food lifestyle but could not keep themselves drifting.

But that doesn’t mean they are done trying. In fact, far from it. They are still prominent as a grocery company and ever improving their services to cater to a growing new generation of health and environment concerned population.

Hope this article provided you with enough facts to help you understand why was Whole Foods successful initially. Thanks for reading and until next time, farewell.

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The Grocery Store Academy is a blog about everything that has to do with grocery stores. This is your #1 spot to find the right information for your needs.
About the Author
Ferdi Vol has worked several years in a grocery store and has a passion for good food. He's happy to share his passion with you!
About Ferdi Vol
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