Whole Foods, gone bad
Whole Foods Market Inc. -- or, as it’s become better known recently, No. 48 in the bestselling book “Stuff White People Like” -- has problems. Chiefly, there are fewer people, white or otherwise, interested in paying a premium for its ethically-cultivated, fair-trade, organic gourmet fare. Eating might be a necessity, but the current economic downturn has sent consumers scurrying for cheaper grub, which in turn compelled Whole Foods to announce that its third-quarter financial results were off by more than 30%. Its stock price was accordingly hammered last week.
For the last 30 years, Americans have been drastically modifying their diet. The organic movement specifically, once the province of affluent Berkeley bohemians and an elite cadre of idealistic farmers who despised big agribusiness, has made significant inroads with an American public raised on Wonder Bread and canned ham. Whole Foods boomed alongside this national trend and was handsomely rewarded. But sticker shock was always an issue; the grocer earned the derisive tag “Whole Paycheck” because even free-spending customers with a jones for wild-caught salmon were taken aback when the contents of a single reusable shopping bag ran them $100.
Still, when times were good, folks with the wherewithal could view such spending as a kind of “virtuous inflation,” a volitional exercise that flew in the face of actual inflation, which for years was low. Consumers didn’t have to shell out a lot of dough for organic plum tomatoes lovingly cultivated in volcanic soils. They did so because they could. And because this choice, while economically perplexing, allowed them to bolster a view of themselves as opposing rapacious mega-corporations that peddled genetically modified products grown in vast fields rendered toxic by industrial fertilizers and pesticides. It was political action, practiced at the dinner table, energized by books like “Fast Food Nation” and “The Omnivore’s Dilemma.”
(It’s the same spirit that moves people to pay extra for hybrid cars. Paying the higher price is self-imposed inflation, but Prius lovers prefer to think of it as a down payment on a future with fewer environmental problems caused by automotive emissions and oil drilling in wildlife refuges.)
Grocery store chains that cater to the less persnickety sensed the opportunity too. Hence, we now have Whole Foods-esque selections at Ralphs and Vons. And, as several commentators have noted, even Wal-Mart stepped up, officially bringing the gourmet-organic trend to the masses.
This is all great, except that it reveals a point of profound ignorance about Americans and their eating tendencies. We are recent converts to the idea that you absolutely are what you eat, unlike citizens from countries with a truly embedded food culture, such as France and Italy. Unlike a Parisian or Roman, we’re unlikely to insist on organic chow if it means we’ll have to drive less or turn off the air conditioning all summer.
In fact, when the economy goes south and belts are tightened, the first area of spending that we seek to attack is food: As the cost of consumer goods jumped 5% this year, business articles have relayed tales of shoppers scouring the aisles for cheap store-brand products and supermarkets doling out more coupons.
Any form of “virtuous inflation” quickly vanishes in the face of the real thing. I’ll probably be just as healthy if I eat the plain old non-organic apple, even though it may have been sprayed with pesticides. I’ll certainly be less stressed about my bottom line. Ultimately, this is a strength: Under duress, many Americans focus on the fundamentals and defer gratification on the indulgences.
Moreover, Whole Foods these days seems to hawk fewer daily necessities and more expensively marketed perks. Several of the company’s new stores, such as the two-story circus-like affair in Pasadena, have engendered a backlash among those who believe that Whole Foods is now more interested in promoting a luxury lifestyle that includes chocolate fountains and tapas bars. Off to the neighborhood farmer’s market those shoppers will go.
Whole Foods ultimately fueled its success on a very dangerous business wager: that once customers had grown accustomed to the good vibes that virtuous inflation inspired, they would ignore their self-interest. Whole Foods is struggling to sustain this key psychological link (and regrettably, the larger organic movement will probably see a rollback of its recent gains as consumers ride out the economic downturn).
A scientist would point out that the body doesn’t care what you’re feeding it, so long as it’s nourishing. When times are tough, that means the value-pack bag of frozen chicken thighs wins and the vegetarian-fed, free-range whole fryer does not. Virtue is a funny thing: It has a hard time competing with an empty stomach. Or an empty wallet.