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Whole Foods a victim of their own success....stock drops 20% in one day

Title and article speak for itself.............

http://finance.yahoo.com/blogs/breako...

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  1. A very wise and very successful gentleman I used to work for would sometimes say "When you do something right, you draw a lot of flies."

    1. informal science project...

      but curious to hear others' views on how much lower prices for organic goods at Walmart and Safeway will impact WF. I know myself, you can't pay me to go shop at Walmart as its a miserable experience and my local Safeways have pretty mediocre produce as compared to WF. So for me, WF remains my go to place, unless there is too much of a price differential at SW.

      I'm just wondering how much real cannibalization there is between WM and WF and then SW and WF. I imagine more in the latter comparison, not as much in the former.

      6 Replies
      1. re: FattyDumplin

        The price difference will be a huge driver for a lot of things. If Walmart is significantly lower on organic milk and eggs along with a handful of key fruits and vegetables they'll pull a lot of business from everywhere including Whole Foods. informal indeed, but I know a fair number of people who have no problems shopping at Walmart but insist on organic for many of their food purchases especially for their kids. If they can save 20%+ on those groceries, they'll go to Walmart instead of Whole Foods.

        For my wife and me, with no kids, we shop a combination of Whole Foods, Trader Joe's and Fresh Market for various things. We haven't been in a Walmart in years and won't start but with just two people and the amount we eat the total savings on that stuff wouldn't add up that much so it's not a difficult decision for us.

        1. re: FattyDumplin

          We don't even have a Walmart nearby, not that I would go there anyway. I agree about the Safeway produce. However, Safeway has started to carry a number of brands that I could previously find only at WFM, including Amy's, BoltHouse, and so on. So if I happen to need to go to Safeway (sponges, Sabra Hummus, Hellman's mayo) I will pick these things up, too. I haven't noticed if they are cheaper there than at WFM.

          I won't shop at Walmart because it is the antithesis of fair trade. The only way those prices can be that low is buying super-cheap, which means huge pressure on the producers, which in turn means huge pressure on the workers.

          It is about more than just organic.

          1. re: Just Visiting

            at least based on these two responses, one should expect to see continued valuation normalization for WF versus other grocers.... that would mean there is a hell of trading opportunity here.

            i thought people would be more loyal to WF becuase their customer service is so good. i love that i can sample anything and return anything anytime no questions asked. and its justa much nice shopping environment. but so far, doesn't seem to be the case.

            1. re: FattyDumplin

              I agree with your first paragraph entirely.

              I also agree, mostly, with your notion that there will be some loyal customers. As much as I'm convinced that enough people will shift to other places for cheaper organics (because with lower prices at Walmart, other traditional grocery stores like Safeway and Kroger will have to lower their prices some, too which will also pull from Whole Foods) I do think there are plenty (and enough) people like you who value other things about Whole Foods and may not be primarily price driven that Whole Foods will continue to be profitable and successful.

          2. re: FattyDumplin

            I feel the same way, there is no way to get me to darken Walmart's door, and I have to believe the vast majority of WF shoppers feel the same.

            1. re: FattyDumplin

              although i don't buy all my organic food at whole foods, the stuff i do buy there i will continue to buy there.

              1) i use a lot of soy milk, and their 365 Brand of organic soy milk is the one that tastes best to me.

              2) the prices in their bulk department are extremely good and the department is always extremely clean and, most of all, i TRUST whole foods to REALLY stock organic food.

              3) their 365 brand of organic, vegan, mayo is the brand that i like

              4) my local whole foods will special order tofu for me from SAN DIEGO SOY DAIRY. that alone, would
              keep me at whole foods.

              5) the moral/ethical issues with Walmart are far worse than the moral/ethical issues with Whole Foods, imho.

              6) given the condition of so many of the walmart stores, i wouldn't want to rely on them not to cross contaminate the orgainic goods with the pesticide goods.

              7) when i want to save money on organic produce, i'll usually go to Sprouts. it's cleaner and closer

            2. Probably a good time to buy Whole Foods in this dip. Jerk out in a month or so.

              I live in Austin, and I remember when there were only two stores. If only I'd invested when they went IPO!

              5 Replies
              1. re: rudeboy

                I remember their first store, on Lamar, circa 1986, and I shopped there regularly. They have come a long way.

                1. re: Veggo

                  I used to bring my dog there and tie her up outside. There was a meat "cabinet" that had roasted lamb ribs, each side for a dollar. I'd come out, and all the nice people had water and sometimes food for her. I'd take her off to the outside tables and eat the meat off the bones. She would consume the rib bones entirely. She lived to 17, so I guess it was okay to let her eat the bones.

                  1. re: rudeboy

                    been a long day, but on my first read, i interpreted your post to mean you would take her outside and you would then eat the meat off the bones they gave her and give her the bones. which struck me as pretty funny :)

                  2. re: Veggo

                    Oh, and I think that there was a previous original location on Rio Grande or somewhere. Before I got to Austin.

                  3. re: rudeboy

                    It's funny because I've been to WF in 5 different states and the Austin locations are by far the worst I've been to. Don't even get me started on the "landmark" WF. That location is a complete nightmare to negotiate.

                  4. I shop at WF mainly for the variety they offer. Yes, other groceries in our area have an organic section but the pickin's aren't that great usually.

                    1. I see any increase in the availability and affordability of organic produce, sustainable seafood, and human organic dairy et al as positive.

                      The more support for organic farming and ethical sustainable practices is only a good thing if you ask me. Whole foods is a niche that will maintain a large segment of the organic market shopper/consumer, I'm not worried about them or the value of their stock.

                      5 Replies
                            1. re: coney with everything

                              I just had a baby - a human organic dairy is EXACTLY what I am! =)

                              1. re: aching

                                You could make a lot of money off that by selling at WF's! Funny, I know some "out-there" people who made a dish using pumped breast milk and had everyone over to eat it. While I'm a true CH, I did not......

                          1. i noticed a lot of people on here dinging quality at local competitors. i think this will be extremely regional. here in downtown seattle, i don't even know how far you'd need to trek to find a wal-mart... but my local QFC, safeway, trader joe's, kress iga and farmers' markets or csa boxes do a pretty bangup job. we also have metropolitan market and pcc, which are less strict on organic than WF but definitely play in the same sandbox. my safeway, for 25% less or even more than WF or met market, stocks organic produce (including heirloom as well as "regular" options), locally sourced goods, herbs, etc. the meat counter is excellent with tons of choices - the seafood is a little lacking, but for that i simply head to pike place market or the international district. i think whole foods will probably face a lot of trouble in areas that can offer a lot of (stiff) competition for the organic market - even at the same price point, i like having the option say at met market to buy my regular detergent should i happen to need some when picking up a specialty item there rather than making another stop. i do agree that WF continuing to expand and accelerate at the rate they were is probably out of the question.

                            11 Replies
                            1. re: chartreauxx

                              Central Co-Op puts them all to shame though. In terms of value and quality. Seattle has shitty grocery options unless you go to like 3-4 stores though. I find that many of the stores you listed (safeway, qfc, iga, tj's) are nowhere near the quality of whole foods, though they are substantially cheaper.
                              The farmers markets around here are probably going to put some competition on WF though. Was at the Columbia City farmers market this afternoon and it seems to be getting bigger and better every week.

                              1. re: EatFoodGetMoney

                                depends what you're buying, where you live and what your transportation options are. i don't have a car, and reaching the co-op for me means an hour round trip on the bus...but that's without traffic and we all know how that story goes. in my area i can easily reach: pike place market, lower queen anne safeway, lower queen anne qfc, queen anne metropolitan market. a couple times a month i make a special shopping trip to the international district (which i think has about the best fish in town, as well as vegetables and fruits at good prices and of types i don't find elsewhere). at least at my safeway and qfc, quality is fine most of the time, especially in the organics. i agree about farmer's markets, and while WF may have a broader selection and higher quality than some (not all, imo) major chains, they've got competition from trader joe's at a markdown, and in their same sandbox from metropolitan market and pcc. that in addition obviously to the co-ops, neighborhood markets, CSAs, urban agriculture/grow your own. and while the selection may be broader and the quality variable from location to location, i'd say that those who can't truly afford whole foods prices (most of their client base, i'd wager - i know for me it strains my budget) are likely to leave for organics at acceptable to good quality, with a reasonable selection, at a significant savings. that combined with increased competition on all fronts puts a lot of pressure on whole foods, i think.

                                1. re: chartreauxx

                                  Maybe the Safeway and QFC are better in your area. Out on Rainier they're pretty ghetto, pretty gnarly lookin stuff most of the time.
                                  I actually don't shop at WF often at all, there isn't one close enough to warrant going to often. Seems like you have good options closeby in QA even without a car. I really wish there was a Met Market near me. I like the one in West Seattle. I always end up leaving with unexpected items. I think Met Market could definitely put some pressure on WF, PCC even more so. WF really isn't that necessary in Seattle. I love having it in places like Frisco, CO. Where before it was built the grocery options were nearly all garbage unless it was summer in which case you could go to farmers markets.

                                  1. re: EatFoodGetMoney

                                    pretty much sums it up. i'll be honest, the only safeways i've been to in recent years that aren't kind of sketch are the two in queen anne (upper, lower). but that's uptown for you, amiright? pcc is a bit more of a haul; there's a whole foods not too much further (maybe even same distance and less uphill...?) as the met market but i almost never go unless i'm already over there and in a rush. met market is awesome, capturing whole foods' focus on natural, organic, specialty, high-quality products (including farm-fresh eggs delivered every wednesday from local farms) but with the added convenience of "normal" foods/products also available (albeit at a huge markup, so only if i am *really* in a rush, read on...). but since bartell's is on top of met market, and hitting safeway on the way home is literally a 2-3 block detour, my usual shopping route is bartell's if i need anything there, met market for grand central baguette and any specialty needs, safeway on the way home. boom! takes me 1 hour to complete on foot hitting all 3 stores as long as i know what i'm shopping for.

                                    i agree that pcc and met market, and similar upscale ops in larger or more food-centric areas, are serious contenders with WF and safeway, qfc, etc will be undermining WF's market by chipping away at people who were saying "well i really can't afford it but i want my kids eating organic"... those people are heading straight for qfc, safeway. trader joe's, farmer's markets, csa deliveries, target, etc. now that organic, local, in season, vegetarian, vegan, probiotic, prebiotic, etc are "mainstream" i think whole foods will need to figure out how to broaden its mass market appeal, or bring down prices, if they want to continue thriving.

                                    1. re: chartreauxx

                                      Have you two thought about posting this info on the Seattle board also? Good stuff here.

                                      1. re: chartreauxx

                                        Yeah, I'm down sorta near Columbia City so QA is pretty out of the question. On a typical big shopping trip I go north on Rainier to the Co-Op, then on the way back I get fish at Mutual, bread at Columbia City Bakery, and meat at Bobs in Columbia City, all on Rainier. A shopping trip might last 90 minutes or more with a car and half is driving (or rather, trying not to get killed driving up and down Rainier) unfortunately. If I'm feeling less ambitious I go to the Seward Park PCC (Can't wait for it to be replaced by a GIANT new PCC in Columbia City), I can get there in like 5 minutes, and Columbia City Bakery and Bobs are next door to each other which is super convenient too. With just those 3 I can get most of what I need without sacrificing too much quality or choice.
                                        I've been going to the Co-Op (best produce I've ever seen at a grocery store, and consistently good, never any surprises) less lately because I can just go to farmers markets. The Co-Op really got me to eat more produce because the quality was so good. They actually just remodeled their entire produce section last week too, still haven't seen it all finished.

                                        I think WF will have to lower their prices in some areas where consumers demand is more elastic, mostly due to the easy availability of substitutes. It'll probably happen in dense urban areas first where the competition is tougher like Seattle. I can't believe the Whole Foods still exists in Santa Cruz, CA. Out there WF is the lowest high end grocery store.

                                        Maybe we should make a Seattle thread. I'd be curious to know where to go in the ID for seafood. I've never had a complaint (or anything I haven't loved) with anything I've purchased at Mutual Fish, but the prices are pretty high and I'd like to eat more seafood. The local Vietnamese markets around my area seem to have good seafood, maybe I'll check those out in more detail first.

                                        1. re: EatFoodGetMoney

                                          I hope you will. Our daughter and her family live there and Uwajimaya is a regular stop for us for food shopping.

                                          1. re: c oliver

                                            i'm scared to start a thread on this and blow all my best shopping deals wide open! ;-)

                                              1. re: c oliver

                                                that's on the list...kind of an open "secret" among foodies though wouldn't you say? i thought everyone knew about big john's.

                                                1. re: c oliver

                                                  Big Johns is awesome. I love that place, only found out it existed recently.

                                2. Following the May 8 "dip" in Whole Foods' stock price, on June 6, the Austin (Texas) Business Journal reported that Imperial Capital initiated coverage of the stock, rating it "outperform" with a $48 price target. A Tampa radio station, WFLA, then reported on June 6 that "the chatter on Wall Street has speculators believing that Publix Supermarkets may be ready to purchase 'Whole Foods Market.'"

                                  Publix is the largest chain supermarket in Florida, with over 1,000 stores, plus some presence throughout the Southeast.

                                  Publix has moved into organic foods in a big way, has super-clean, bright, attractive stores and some experts speculate that continuing the Whole Foods chain as a separate entity, but being able to use its distribution chain for organic foods would be useful. So the two relatively high-end chains would fit together well.

                                  This is my speculation, not something I have read: Wal Mart's food stores, until recently, had been running heavy price comparison advertisements, showing Wal much cheaper than Publix. Publix has hit back, touting the higher quality of its produce and shelf items. So would the purchase of Whole Foods be part of the same strategy?

                                  Also, the articles I have read have referred to a Publix purchase of Whole Foods, citing 330+ stores, but it isn't clear whether these are nationwide or just in Florida. It sounds to me like it is just in Florida, but it is not clear. It is hard for me to see Publix suddenly running a nationwide operation. It is a privately owned regional grocery store.

                                  I love Publix. I think it's a great chain and I shudder everytime my girlfriend drags me to Wal-Mart, especially the grocery store section. I am rooting for Publix, but I am not sure that this is the way to survive the Wal-Mart onslaught.