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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.
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Reader Comments (Page 5 of 5)
12-08-2008 @ 1:27PM
Ben said...
I am confussed why everyone thinks this is a monopoly. Have you all not heard of publix, kroger, piggly wiggly, HEB, and so on and so on. Its a grocery store and they do not control all grocery stores in the USA therefore its not a monopoly. They may have a monopoly on a niche "organic market" but that is not what the anti-trust laws were made to protect. You can buy "organic" food at any grocery store. I do not shop there becuase they charge and arm and leg for all their items.
12-08-2008 @ 1:59PM
Tom Jarvis said...
A Whole Foods store recently, conveniently. opened in my Boston neighborhood. It was a welcome addition & I have shopped there weekly since it opened. Never again! Their shennanigan's taint the food & the experience.
I hope every Whole Foods customer reads this article. Just goes to prove things are not always as they seem. I expected better from their execs.& they should be ashamed of themselves.
Keep your eyes on the bottom line, you folks at WF-including your attorney's fees.
12-08-2008 @ 2:25PM
glenn said...
There is a Whole Foods market about 3 miles from my house which is a quick 4-5 minutes from my house....but due to their lack of honesty and ethics and lack of a sense of fair play, ....They will " NEVER " see another penny from my household....
12-10-2008 @ 10:46AM
MT said...
I was living in Monterey, California when Whole Foods came to town. There were several other great natural-food markets in the area. HoFu bought one (and closed it) and hired the owner as a 'manager' (he was fired or left within a year). They also competed the others out of business ..except one which has struggled since, but hangs on (the owners had to sell to a 'big business', then stay on to manage). The Whole Thing was dastardly, and left me dis-liking WF.
Then I came to Dallas, and went to work for them. I didn't want to, but it was a desperate time. I worked for them for 3 1/2 years.
While I worked there, the 'policies' of the WF org began to change...away from the "core values" to simply big business. I believe this began in earnest when the company went 'public' (stock-holders & board of directors) and the bottom-line became all important.
I understand why people dislike WF. I myself feel a great disappointment with them...I expected them to up-hold their 'values' as presented to me when I went to work there. I up-held mine! But I have come to realize my own naivity in believing in those values and believing THEY believe in them and will ACT within them!
So I pass that on...business is business (and BIG business is BIG business) and cut-throat, even if they say they aren't....and it's stupid to believe they will 'care' otherwise. Any show of 'surprise' at WF's dastardly actions would be based on expecting them to be 'fair' and 'care', et. I know they say that, but actions speak...period.
Reading here that they are playing "dirty pool" doesn't shock me or outrage me today. I'm over that, and there are much more pressing matters to be addressed...as in none of this will matter when Nature no longer supports our human needs because of our stupidity and arrogance and mis-use of resources! It's time to 'turn-around' and deal with what we CAN do something about.
1-19-2009 @ 6:49PM
Shopper said...
This article is complete garbage. People should be looking at the FTC and what it's doing to WFM. They are trying to put them out of business for personal reasons. If you do a little research you can see this article is giving one side to the story. My local WFM's (I have 4 with in 30 min.) have a ton of Local produce and meats. The Devon and North Wales stores even have farmers markets out front on some weekends were they invite the farmers/producers to come and sell there goods. That has to take away from some of their sales on those days. What other grocery store does this?