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How Whole Foods has become a ‘victim of its own success’

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When John Mackey opened his first store in 1980, virtually nobody knew the difference between conventional groceries and organic foods free of pesticides, hormones, and artificial ingredients.

But his store, Whole Foods, went on to become a juggernaut, launching an organic food movement that has swept the nation, and many considered Mackey a pioneer.

Once, organics weren’t available at all. Then, shoppers could find them at Whole Foods and, eventually, a few other specialty shops. But now, even Walmart and local grocers have an organic section dedicated to allowing customers access to healthier choices.

What was once a rarity has become commonplace. It’s great for shoppers, but not so great for Whole Foods.

In other words, according to a UBS research note reported by Business Insider, Whole Foods has become a “victim of its own success.”

“While Whole Foods has done so much to inspire, create, and revolutionize the market for natural and organic products,” the note reads, “we now see it being the victim of its own success.”

While organic food sales have tripled between 2005 and 2015, from $13.8 billion to $43.3 billion, Whole Foods has experienced a four-year decline in same-store sales due to more competition.

The UBS note says that 42 percent of Whole Foods stores have a Trader Joe’s within a 5-minute drive, and 34 percent are near a Kroger store, a mainline chain with a heavy organic food selection. And these competitors aren’t just offering similar goods, but they are offering them at cheaper prices. In fact, UBS says Whole Food prices in the Los Angeles area are 13 percent higher than Kroger.

Even the chain’s new 365 by Whole Food Market, their attempt at keeping prices lower and also placing stores in challenged areas like Detroit that may not be able to support a regular store, has been met with heavy competition, particularly from overseas as chains like Lidl and Aldi expand aggressively.

While Whole Foods did launch a movement, it has increasingly come under criticism even from the health food community (comprised of conservatives and liberals alike who oppose the use of growth hormones, pesticides, and particularly genetically modified organisms, GMOs, in the foods they consume) for not taking a strong enough stand against GMOs and even supporting legislation to further muddy the water on GMO labeling.

Op-ed views and opinions expressed are solely those of the author and do not necessarily represent the views of BizPac Review.

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Scott Morefield


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