There has been a lot of discussion about Whole Foods Market recently. This Texas-based food retailer has made headlines with strong sales growth and sweet margins, plentiful store expansions, price cuts, and much more. They certainly have made a name for themselves in a tough economic climate when other retailers are packing up and leaving town in a hurry. Even with the “whole paycheck” reputation, out there on main street, they are winning. Therefore, with all this commotion, I thought I would pay them a visit at their Mississauga Square One location (just outside Toronto).

Overall, Whole Foods is a paradise for the healthy “foodie.” There is no other way to describe them. Now don’t get me wrong, you pay a premium for what you get but wow is it ever fun! Now hold on, before I go further I must declare that I have joined the millions of North Americans who have started eating healthy recently and my affection for them may be a little biased. Here is my assessment. Take it with a grain of salt substitute!

1. Indie Grocery shop feel – when you walk through the store you feel like you are in a local independent grocer. For Toronto-dwellers, think Bruno’s. Speckled floor tiles; folksy feel; Lots of earthy colors and fixtures make you feel like you drove outside the city and stumbled upon a great hidden farmers market.

2. Huge differentiated assortment – they sell food, but they also sell a healthy lifestyle and do a great job assorting that way. In the produce section they have an organic tent that talks to great tasting products that just happen to be great for you. Seafood is “conscientiously caught.” Beef is from “Rain Crow Ranch.” Bread is “naturally kneaded.” Coffee is “sustainably sourced.” There is a “gluten-free” zone as well. Never before have I seen an end cap with a Key Value Item (KVI) of organic Kale Chips.

3. Wonderful branding and signage – as per point 2 above, they sell a lifestyle. Their use of in-store signage is excellent. They educate the shopper at every major category station with buyer’s guides and use graphics to give you that country farm feel. It all comes together to reinforce your thinking that drives you to make that smart and healthy purchase that day. Core values and quality standards are clearly and proudly posted near the cash.

4. Community – a big part of Whole Foods Market is community. It reinforces their lifestyle branding and marketing. Shoppers can sit in a large, welcoming cafe at one of many “community tables” or review local community bulletin boards. You can come in and bottle your own water here. The store acts like a healthy foodie “safe house” where all is right and everyone around them has the same philosophy about eating. A homecoming if you will.

5. Merchandising for margin – it’s not just about feeling healthy and being part of a community. These folks are very smart about making money. Their financials show it too. When you enter the store on the right, you enter a large and profitable fresh produce section which leads to an inspirational meat and seafood offering at the back. Organic is everywhere and we all know organic equals high margin. The lower profit dry goods section in the centre is memorable for lots of differentiated higher-profit items. The left side of the store consists of a profit-driving bakery and a lucrative fresh ready-made section that offers high margins yet again.

In summary, Whole Foods Market does it right! They have grown and harvested a high margin market segment and “serve up” what they want, how they want it, in a way that talks to their high-value customers effectively. They are a great example to look to for success within the retail industry.

Are you doing it as well as Whole Foods Market? Let’s discuss over a healthy salad!

Bruce Winder, Senior Advisor, J.C. Williams Group
bwinder@jcwg.com, 416-705-5627

J.C. Williams Group is a well-known, full-service retail and marketing consulting firm. It offers clients practical, creative, and in-depth knowledge of retailing and marketing, including up-to-date know-how and techniques to make retail operations better and more profitable. You can also read their informative blog, Retaileye, here: retaileye.wordpress.com.