How Whole Foods Got So Big

5 minute read

Amazon announced on Friday that it will acquire Whole Foods in a deal valued at more than $13 billion. So how did a chain that started as a single Texas health-food market create an appetite for such an acquisition?

Based on TIME’s past coverage of the chain, one reason for the store’s success was that it met Americans where they were, hitting the sweet spot right at the center of what feels healthy and what people actually like the eat. “It’s about whole foods, not holy foods,” as A.C. Gallo, vice president for East Coast operations, told TIME in Aug. 12, 2002. “We’re not going to preach that the only thing you can eat to be healthy is brown rice and vegetables.”

Here’s how TIME described store’s the rise in a Feb. 23, 1998, feature about the company:

When a tiny natural-<foods market called Whole Foods opened in Austin, Texas, in 1980, it served a comparably tiny clientele: an assortment of vegetarians, macrobiotic dieters and those seeming oddballs who took supplements such as ginkgo biloba and echinacea. Like other mom-and-pop organic shops that dotted the country, the store was friendly, cozy, intensely concerned with its products’ purity and expensive.

Seventeen years and a quantum market shift later, natural and organic foods own the hottest corner of food retailing, in which soccer moms mingle with ponytailed herbalists in the aisles of sparkling new stores. Sales of organic products alone, a mere $178 million in 1980, have blossomed into more than $4 billion, while sales of “natural” products — a term that’s slicker than soy paste — have tripled in the 1990s and now exceed $12 billion. The retail organic-and-natural-foods business is gorging itself on 20%-plus annual-sales increases, in contrast to a subsistence diet of 2%-to-3% increases at traditional grocery chains.

The chief beneficiary of the boom is Whole Foods Market, whose 900% growth in the 1990s has produced a billion-dollar juggernaut with 78 stores in 17 states. Whole Foods rose to dominance in a three-year buying spree during which it acquired New England’s Bread and Circus, North Carolina’s Wellspring Markets and California’s Mrs. Gooch’s. Last year the company swallowed its biggest rival, the 22-store East Coast chain Fresh Fields, leaving Whole Foods and Wild Oats Markets, based in Boulder, Colo. — one-quarter its size — as the only two national natural-foods chains.

When organic supermarkets started springing up, their investors figured that the aisles would be populated by a nation of granola eaters eager to pay extra for the halo of purity. They were dead wrong. We remain a nation of committed Twinkie eaters even while welcoming organic foods to the table. Consumers aren’t willing to pay a hefty premium for organic, nor do they want to give up any of the conveniences of shopping in large stores that stock everything from soup to lug nuts.

Whole Foods has successfully bracketed these requirements. The stores offer chemical- and preservative-free foods, organic produce, hormone-free meats, cruelty-free cosmetics and ecologically friendly household products. But unlike the old niche stores, these markets are not ascetic: you can buy beer and wine as well as nonorganic produce, foods with refined sugar, and everyday household cleaners like Windex. The new stores, typically 30,000-plus sq. ft., also feature on-site bakeries and kitchens. The latter offer a wide assortment of meals, including vegetarian repasts to go.

Whole Foods even got the rest of the food industry running to cater to the higher-income buyers that the store attracted. “Organic produce is no longer the wilted stepsister of conventionally grown fare, and that’s largely because national chains such as Whole Foods are demanding — and getting — a better-looking produce,” as TIME noted in 2002.

And looks, in fact, were also a key part of why consumers keep coming back. “Not an item at Whole Foods escapes design,” TIME reported in 2006. “The produce department appears art directed. Vegetable displays are torn down and put back up nightly. Strawberries are stacked airily in their baskets to resemble Chinese lanterns, a technique pilfered from Asian fruit markets. Over in prepared foods, cut fruit and portobello-mushroom kebabs are designed by a woman who travels from store to store training team members to do the same.” The feature quoted Walter Robb, a co-president and co-COO of Whole Foods as saying, “Shopping is 60% impulse, so the more the food is presented in a beautiful and exciting way, that all becomes part of the experience.”

In fact, when the magazine remarked that the market’s housewares and bath products section seemed to be the emptiest part of the store, the article guessed that it was only a matter of time: “Whole Foods may simply be repeating an experience it has encountered many times in its 26-year existence: landing on an idea that is ahead of its time and then waiting around as the world catches up.”

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