Natural Foods Merchandiser

Whole Foods begins integration after closing deal

Whole Foods Market has an??nounced it will jettison the 35 Henry's Market and Sun Harvest stores it acquired in the Wild Oats Markets merger that went through in August after a wild wrangle with the Federal Trade Commission in federal court. The stores, located in California and Texas, will be sold to private equity firm Smart & Final.

Now the big questions are how many Wild Oats stores will be closed, how many Wild Oats employees will stay and how long will it take to rebrand the stores.

Of the 75 Wild Oats-branded stores, Whole Foods will close between eight and 10, said Whole Foods Chief Operating Officer Walter Robb in an interview Sept. 7 during a retail conference in New York. That number is lower than originally expected. Locations would be announced by the end of September, Robb said, but these were not available by press time. Robb also took a swipe at Wild Oats' management, saying, "This is a company that I think had been going sideways for a couple of years."

Beyond the usual job redundancies that result from mergers, there may be resistance on the part of Wild Oats employees to join the Whole Foods team because of prior comments by CEO John Mackey and other Whole Foods leaders.

"As an Oats employee, I'm not sure I can get past the fact that my new CEO has talked very badly about my company," said John Moore, former director of national marketing for Whole Foods. "I do think you'll find people who won't find it a cultural fit and decide it's time to move on."

Whole Foods also announced it would permanently cut prices at the 23 Wild Oats stores in its Rocky Mountain region, which has the greatest concentration of Wild Oats stores, and offer 10-percent-off weekends.

"They made a lot of claims before the FTC about efficiencies and cost savings and making themselves more competitive," said Paul Yde, a senior antitrust partner in the Washington D.C., law office of Freshfields Bruckhaus Deringer. "FTC may be tracking that closely."

Whole Foods has also announced a new store concept, a smaller, value-driven approach called Whole Foods Market Express, which will feature inexpensively priced items and grab-and-go items. The first announced location is the original Wild Oats store in Boulder, Colo.

"This concept was talked about in the past, but it was never green lighted because it didn't seem to fit the bigger-equals-better mentality," Moore said. "It seems to go up against Trader Joe's ... It also gives Whole Foods an opportunity to showcase its prepared foods and private label products."

In the past, Whole Foods has taken up to two years to rebrand acquisitions. "The more loyal Wild Oats customers are, the more cautious Whole Foods will be in terms of making the transition," Moore said. "My advice would be to make it quick."

One thing is clear: Whole Foods—not the management of Wild Oats—will be calling the shots. "They gave us the keys and left town," Robb said. "We are well down the road with this in terms of cultural integration."

Mitchell Clute is a Fort Collins, Colo.-based freelance writer.

Natural Foods Merchandiser volume XXVIII/number 10/p. 14

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