In the continuing FTC battle with Whole Foods (NYSE: WFMI) over the company's merger with Wild Oats Markets (a merger, I might add, that's already complete; all of the stores in my region have been converted to Whole Foods markets for many months), there is a local casualty. This local casualty has not been forced out of business by the strength of the Whole Foods conglomerate, with, now, stores in every quadrant of the city -- no, it's thriving, popular with both customers and the quirky-and-excellent local purveyors of vegetables, cheeses, chickens. But New Seasons Market is facing unwelcome bullying from the organics food giant.Yesterday in the New Seasons blog, popular CEO Brian Rohter points to the objectionable subpoena he's received from Whole Foods' attorneys, claiming that his company's secrets are party to the FTC/Whole Foods dispute. (A response from Whole Foods indicates that this request went out to 96 companies, stores and vendors, although those aren't detailed.) The subpoena demands a wide variety of documents, including all documents relating to competition with Whole Foods or Wild Oats; financial information, by store; market studies and strategic plans; and all plans for future stores, expansion and renovation. Rohter's attorneys have objected but tell him he could very well lose and be ordered to hand over the documents (at considerable cost to a small local grocery chain).
Rohter argues that, though Whole Foods insists only the attorneys and consultants will see the information "That's like trusting the fox to guard the henhouse – and we don't have any faith it's going to work like that. ... some of the people at Whole Foods have a history of less than stellar behavior when it comes to competing fairly." In a follow-up to a Whole Foods response at Portland Food and Drink, Rohter says, "And those "consultants"...? Once they've looked through our information they're not going to "unlearn" it. The very nature of their job means they carry things they've learned from one job to another. Will they ever work for Whole Foods again?"
Rohter and his many supporters point to past aggressive behavior by Whole Foods management as evidence that dirty pool is in full swing, including the infamous episode in which CEO John Mackey posted derogatory statements about Wild Oats using a phony screen name, and internal emails with phrases such as "Wild Oats needs to be removed from the playing field" and "I want to crush them and I want to spend a lot of money in the process" (yikes!). Many Portland consumers are jumping to call a boycott of Whole Foods; others are decrying the "ploy for sympathy" Rohter is making; others still wonder if it's not just a boilerplate wishful-thinking legal request (Rohter argues it's not and says he's asked many other small grocery chains in other markets if they've received similar demands; they haven't).
I'm not boycotting (largely because Whole Foods markets are inconvenient for me and don't offer enough local produce and meats, anyway) but I suspect that Rohter is right in his belief that Whole Foods management would end up using the information it gained for ill, if indeed New Seasons was forced to comply. The market has been rousingly successful despite prices that are just as high as those at Whole Foods, largely because of savvy location selection, the fantastic treatment of small local vendors and employees, and the personal and genuine culture the chain has developed. Management really gets what its consumers wants, and delivers (literally and allegorically); Whole Foods could use more of New Seasons' passion. Unfortunately, with the Leadership Team [Whole Foods' capitalization] as it is, I doubt the company could ever successfully clone the balance between embracing local, sustainable cuisine and offering a wide variety of conventional products, too. Nor could Whole Foods imitate (in all its markets) how to understand consumers and treat employees with respect.
This may not materially impact Whole Foods' local sales but it certainly has destroyed the company's credibility among the area food thought leaders. And it shines a light into the culture of bullying in Whole Foods management; a culture that doesn't lead to shareholder value, in my opinion.











Reader Comments (Page 1 of 5)
12-03-2008 @ 3:08AM
dang said...
Blame the FTC and their puzzling pursuit of the Whole Foods/Wild Oats merger. I can't fault Whole Foods for trying to defend themselves. And the argument that Whole Foods does not control the organic/natural foods market (at least in Portland) because of the existance of stores like NewSeasons is valid. Especially when you consider Brian Rohter used to run the stores that became the Portland Wild Oats locations.
12-03-2008 @ 6:26AM
ryan said...
Makes me sick!! Im opening a business in smaller scale dealing with close to the same problem!! The good part? I love whole foods and NOW IM GONE!! So take no shopping from me for the next hopefully 60 years and theres a significant loss! Now..all we need is a few hundred thousand more to do the same.
12-03-2008 @ 8:02AM
Jerry said...
I am writting BOYCOT WHOLE FOODS on the back window of my car this morning. Every American needs to take a stance on this. This is an excelent example about the republicans talking with a forked tongue. They preach "FREE MARKETS" then make it lawfull to run lawful competition out of business. Why is "HELL" would a PRIVATE business plan be made available to your competitors. THIS IS IMPERIALISM. Bush abolished to Anti Monopoy laws that have served us so well for so many years. WE THE PEOPLE NEED TO TAKE BACK "OUR" COUNTRY ! ! ! ! ! ! ! NOW ! ! ! ! ! !
12-03-2008 @ 8:22AM
Jerry said...
Nothing here trumps that FACT that business and marketing plans are private and not to be shared with a competitor. This is still IMPERIALISM and should be stomped out,,, literally.
BOYCOT WHOLE FOODS ! ! ! ! ! ! !
12-03-2008 @ 3:15PM
bob said...
Whole Foods has some of the dirtiest rotten top excutives in any industry in
the entire country. Top thug in this
company is John Mackey, a lackluster
executive who can spin crap into silk.
Thank God he and his wife pledged to have no children. Could a future America
stand anymore like him!
12-05-2008 @ 7:28PM
Barry Summerlin said...
What the heck is a food thought leader?
12-06-2008 @ 8:29PM
Sophia said...
Whoa, those first three guys sound like the same person. Might want to ease up on the shift-1 button a bit if you really want to be persuasive. No one wants to side with a shrill.
But, yeah, WF might want to lay off. They can claim that it's the FTC forcing their hands and that it's competitor's records will all be kept secret, but there is a precedent for WFs to try to break that confidentiality.
Until this is resolved, this is one shopper who's taking it elsewhere.
12-07-2008 @ 6:33AM
paul said...
BOYCOT WHOLE FOODS starting today
12-07-2008 @ 6:33AM
paul said...
Thats sounds like something Wholefoods
would do just to gain internal info. WF's
CEO is just a plain as*****. thats why I won't shop there anymore
12-07-2008 @ 7:20AM
JOE said...
I WILL NEVER SHOP AT WHOLE FOODS AGAIN IN MY LIFETIME .WHO THE HELL DO THEY THINK THEY ARE.I AM A SMALL BUSSINESS OWNER FOR THE LAST 25 YEARS AND BELIEVE ME I KNOW ALL ABOUT THESE BULLIES.THEY DO ANY AND EVERY THING POSSIBLE TO KILL OFF THE LITTLE GUY.ONE THING I HAVE ENCOUNTERED IS WHERE THEY FORCE VENDORS TO SELL CERTAIN PRODUCTS TO ONLY THEM AND AT THE SAME TIME THEY NAME THEIR OWN PRICE SO IF THE SUPPLIER DONT PLAY BALL THEY CANCEL THE ACCOUNT.WHAT A FREE MARKET.
12-07-2008 @ 7:47AM
Joe said...
Don't believe "everything" you hear or read. There are dirty people on both sides here, you can believe that much. As far as "boycotting" one or the othere why not let them fight it out and just shop where you feel you get the best deals. I say this for only one reason...the MEDIA! You'll never hear the actual truth on this matter, not from them anyway. Who ever the media sides with (could be for many different reasons) they will always make them look better, in every way possible. So don't worry about it, just shop where you would normally and do it for the right reasons, for the reasons you did in the first place.
12-07-2008 @ 8:31AM
elan said...
I used to work for a mom and pop place that had to sell because of the "big guy." I officially today will never shop at Whole Foods ever again---think of the loss, I'm 37 and could've shopped there for like 50 more years!!! I'm going back to more small stores whenever possible:.)
12-07-2008 @ 8:33AM
Tom said...
Could be worse, could be WalMart
12-07-2008 @ 8:41AM
Sarah said...
I heard Whole Foods is going to use Veggie Oil to Power Stores
http://www.curiousread.com/2008/12/whole-foods-to-use-veggie-oil-to-power.html
12-07-2008 @ 8:43AM
kittylou said...
monoploys are not allowed an that is what this is --- liers dont need your secrets but to steal your ideas for themselves they are to lazy to earn them -- themselves --- the president would stop this if you wrote them they did down here in new orleans on light company same game just different product believe you will win an you will i wrote the president on the damages the light company caused an he said no monopolys allowed they were made to fix things with out using my insurance most people dont know but what you are told an most of the time its a lie so check it out with the president he really will answer you
12-07-2008 @ 8:52AM
Robert said...
First of all, Whole Foods is a bit expensive, but remember people, we pay a little more to be able to feed us natural, organic foods-this will alleviate us from getting sick in the fututre which will cost alot of money. HealthCare is not what it used to be...we are guinny pigs if we do not educate ourselves and get on the bandwagon in good nutrition and get away from all of that preservativea, addtivies, pesticides, hormones, formaldyide among other things.....people, remember it is your choice to be either healthful and pay a bit more now than to pay for your ignorance later which will cost alot money plus giong western medicine will create a vicious circle is you let them....sorry, I got off the subject, but we need to wake-up and understnad what we as humans are doing to ourselves. In reference to Whole Foods-they are an organic foodmart....period. They should respected as to what they are doing....the reason why they are successful is because they are in good locations.....locations that have a population that is tired of being tired....thank goodness there is a Whole Foods in my opinion...for our health sakes
12-07-2008 @ 9:11AM
Sally said...
This story is ridiculous. I work for Whole Foods and it is an awesome company, best one I have ever worked for.
12-07-2008 @ 9:23AM
Georgia said...
I actually worked at the Whole Foods corporate office in downtown Austin. From what I know of John Mackey (and his management team), they are cut throats. I had to quit because the stress of working in the offices was too much. I like shopping there better than working there!
12-07-2008 @ 9:26AM
June said...
I love Whole Foods. In New York City where I live, we call it Whole Paycheck. I know organic is more expensive, but Whole Food's prices on a lot of items are high. I do love their store brand ( I htink it is called 365) and it is very reasonable. I use their brand mint hair conditioner and think it is fab-u-lous!
I am definitely a bargain shopper and do a lot of my shopping online to save money on gas, use less gas and not pay tax most of the itme and use coupons. I shop at all my favorite stores through an online website that gives me the unpublished codes at about 300 stores (including Target, The Gap, Best Buy, Old Navy, Drugstore.com, etc) as well as giving me between 5 and 50% back in cash on my purchases. The site is http://www.fatcrumbs.com I am being good to the environment and great to my wallet
12-07-2008 @ 9:32AM
Martha said...
I miss Wild Oats. The associates at Whole Foods are not as knowledgeable about vitamins and homeopathic treatments.