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Whole Foods is popular |
By TERESA F. LINDEMAN
Pittsburgh Post-Gazette
Last week, shares of Whole Foods Markets were around $33, a slide from the 52-week high of just over $53 set in early October and far from the $70 levels of early 2006.
Anyone who has fought for a parking space at a Whole Foods might find it hard to believe but it's been a challenging period for the people running the grocery chain that introduced more than a few shoppers to tofu hot dogs and soy milk.
The company's acquisition last year of Colorado-based rival Wild Oats has been a big distraction. Although the deal has been consummated, the Federal Trade Commission still is arguing that it will hurt consumers and the courts should block the merger.
The FTC complaint argues that consumers benefited in markets where both had stores. Among the places the FTC cited head-to-head competition was Cleveland.
"Each has developed expansion plans that target the other's 'monopoly' markets, as Whole Foods describes it," according to the government complaint.
The merger has since been allowed to go through, but the government is appealing. Oral arguments are scheduled for later this month.
In addition, United Kingdom grocer Tesco has stirred up the food markets on the West Coast with its infiltration efforts. After opening dozens of Fresh & Easy stores, the company recently said it will take a breather to study the results.
Finally, the natural foods grocer's success has been a factor in the addition of shelf space devoted to organic items at traditional supermarkets. "They're not giving Whole Foods such a free run at it as they had before," said Jim Hertel of consulting firm Willard Bishop in Barrington, Ill.
Just how much the growth in organic alternatives has affected Whole Foods is under debate. As Hertel noted, traditional supermarkets have been able to pick up some sales although he questioned how effective Wal-Mart has been at pricing organic products to draw low-income shoppers.
Besides, there's a core audience that likes the natural foods grocer's prepared foods and its range of products, said Burt Flickinger, managing director of Strategic Resource Group, a retail consulting firm in New York. "Whole Foods tends to have a very loyal consumer constituency."
