whole Foods: Green Giant

You may or may not be familiar with the Whole Foods mission—to sell you organic bananas, hormone-free meat and a host of other natural products that promote health and the environment. But for anyone who steps through the door of one of its stores, a secondary agenda becomes impossible to miss: Whole Foods is hell-bent on doing nothing less than delighting you.

The directive appears on the second line of the highly circulated list of core values, pithy mantras that trip off the tongues of the company’s 40,000 devoted employees. The five-item diktat begins, “We sell the highest quality natural and organic products available. We satisfy and delight our customers.”

If the optimism of that dreamy decree seems more like something that’s found in the required reading of Disney employees than those of a natural-food store, indeed, it is that very breathless, what’s-around-the-next-corner excitement that Whole Foods seeks to inspire.

Delight, grocery store–style, translates to a visual and material extravaganza, an ever-changing display of creativity, artistry, abundance, charm, eclecticism, authenticity, originality and extremely high quality, with each element served up with a large dose of surprise, not only because it is designed to do so but also because the age-old American supermarket is so devoid of anything remotely resembling enchantment.

At the Whole Foods store in Austin, Texas, for instance, delight appears around one corner in the form of a secret “beer cave,” a frosty grotto stocked floor to ceiling with unusual beers from all over the world. Customers can sample and even drink them as they shop. In Columbus, Ohio, delight materializes as 16 types of fresh heirloom eggs, their rainbow of colors displayed in a row of baskets so they can be chosen individually.

And at every Whole Foods store, delight comes in the form of the pervading smell of freshly ground and brewed organic coffee (Whole Foods owns the beanery), the informative and amusing handcrafted wooden signs (PARMIGIANO-REGGIANO: THIS RAW MILD CHEESE IS THE FIRST ALL-NATURAL FOOD IN ITS ORIGINAL FORM SELECTED TO GO ON THE SPACE STATION) and, most conspicuously, from the rolling hills of Argentinean blueberries, heirloom tomatoes, Moro oranges and luscious produce, which seem to go on forever, even spilling out the door and into the parking lot in some locations.

“The whole idea is to blow your mind about a grocery store,” says Walter Robb, co-president and co- coo of Whole Foods. “This is not your typical grocery store and not your typical shopping experience.”

Chalk it up to its ’70s-hippie origins that this multibillion-dollar company has, at its heart, a mission statement that is warm and fuzzy. In fact, it is that revolutionary sense of wonder and possibility, combined with industry savvy and a highly relevant message of global health and integrity, that has helped Whole Foods become the fourth largest food chain in the U.S. and the biggest and most profitable retailer of natural and organic foods on the planet.

Founded in Austin in 1980 by vegan-hippie John Mackey as a natural and organic supermarket (one of fewer than half a dozen in the nation at the time) with a staff of 19, Whole Foods has grown to encompass 181 stores in 30 states, the District of Columbia, Canada and Britain, with 40,000 employees and 64 more stores in development. Annual sales reached $4.7 billion in 2004, and the company aims to arrive at $12 billion by 2010. Its stock price has shot up 62% in the past year, and same-store sales have increased 13% for three years in a row, a rate of growth, analysts say, that not even Starbucks can match.

“Over the past decade, Whole Foods has defined and reshaped the industry,” says Edward Aaron, analyst at RBC Capital Markets. “They have pronounced the traditional health-food-store format dead and put together a higher-end specialty experience while attracting a much broader customer base.”

Part of Whole Foods’ success is timing. Aging baby boomers are more health conscious than ever, twentysomething “echo boomers” are in a group hug with everything that promotes health and the environment, and the population at large is becoming more educated about all things sustainable.

While much has been made of its high prices (the company has been dubbed Whole Paycheck), Whole Foods serves up the best quality and most affordable organic products in the nation. Fresh organic foods, its best sellers, are supplemented by two lines of packaged goods: the affordable 365 brand, which includes organic and nonorganic (cheese puffs, canola oil); and the higher-end Whole Kitchen line, including Whole Treats and Whole Kids.

“There is a quality standard that applies to every product in the store,” explains A.C. Gallo, the other half of the co-president, co-COO team. That means no artificial colors, additives or preservatives. For meat, it means no antibiotics, hormones and animal by-products in the feeds, including in deli meats. For fish, it means no antibiotics, mercury or PCBS. (Whole Foods owns a seafood supplier on each coast.)

Broader sustainability extends to every corner of the corporation, from the floor tiles (which are made of 50% postconsumer waste) to the company’s composting efforts to its four solar stores (and one all-sustainable store, which received the rigorous LEED—Leadership in Energy and Environmental Design—certification from the U.S. Green Building Council) to a Green Mission Team, which provides input on every new store.

“When we started, we were so fringe,” Robb says. “Now people start asking questions if things are not sustainable, if things are not health giving. It’s like, ‘Why?'”

Still, “Whole Foods is not for everybody. Hey, we get that,” Robb admits. When site searching for a new store, Whole Foods limits itself to areas with college-educated inhabitants, which translates to wealthier neighborhoods and university towns. “People who understand why they might not want to eat food with pesticide or why organic might cost more, or who are aware that 90% of American beef contains hormones and what that means,” Robb explains.

The year-old store at Whole Foods’ home base in Austin—an 80,000-sq.-ft. flagship and the chief laboratory for new ideas—is designated a “happy” store. All 600 employees attend monthly meetings, and everyone has a say. “We talk a lot about choosing our attitudes and what we’re going to bring to the table that day,” says store team leader Seth Stutzman.

In fact, all Whole Foods stores strive to be happy stores. The backbone of the company is its highly enforced culture of empowerment. Instead of a hierarchy, employees form teams headed by a leader. Everyone’s opinion counts. Hirings and firings are decided from the bottom up, and rule breaking is encouraged if excellence can result. “We’re willing to give up some control or allow you to make mistakes,” Gallo explains, “and through that, people become empowered, and they get really passionate.”

The Montessori-style freedom works. For the past nine years, Whole Foods has been voted one of Forbes’ top 100 companies to work for, this year placing 15th. And with its co-presidents, there’s even a team at the top. Both men have natural-food backgrounds and have clocked about 15 years with the company. They consider their co-leadership—and mutual respect—an example to their 40,000 teammates. “He’s a Buddha. He’s incredibly wise and a brilliant retailer,” the California-based Robb says about Gallo. “Walter’s much more of a risk taker and always two or three steps ahead. And he’s a brilliant store designer,” the Boston-based Gallo says of Robb, who designed the Austin flagship, among other stores.

Another thing about the Austin flagship: it is a she, like a yacht or a sports car, not a he. “See how this is softer, more rounded, more curved, more welcoming?” asks Robb, pointing to the lines of casings and walls. “A store design is about creating an intimacy or a connection. This is a more feminine design. The colors are warmer, shapes softer. The world was overly masculine in the 20th century, and it needs to be more balanced in the 21st.”

Not an item at Whole Foods escapes design. The produce department appears art directed. Vegetable displays are torn down and put back up nightly. Strawberries are stacked airily in their baskets to resemble Chinese lanterns, a technique pilfered from Asian fruit markets. Over in prepared foods, cut fruit and portobello-mushroom kebabs are designed by a woman who travels from store to store training team members to do the same. “Shopping is 60% impulse, so the more the food is presented in a beautiful and exciting way, that all becomes part of the experience,” Robb explains.

Inspiration comes from surprising sources: amusement parks (there are benches for fatigued shoppers and touch screens for lost ones); New York City (a nut cart offers a plethora of fresh roasted nuts in exotic, non–New York flavors like chili lemon); even stores like Best Buy (which has lent technological inspiration). And “we’re totally impressed with the Apple store,” Gallo says.

Last year, to much fanfare, Whole Foods launched a lifestyle section in its Whole Body department offering organic adult and baby clothing, towels, sheets (cotton is more heavily sprayed with pesticide than any other crop) and vegan shoes. That area, however, always seems emptier than the rest of the store. But Whole Foods may simply be repeating an experience it has encountered many times in its 26-year existence: landing on an idea that is ahead of its time and then waiting around as the world catches up.

Other Whole Foods innovations are also forging new ground. The Austin store offers guided tours via iPod and is about to open a catering division and a world-class cooking school. And a 75,000-sq.-ft. store in the center of London will be that city’s largest supermarket ever.

“We’re really still just doing what we believe in, what we think is right,” Gallo explains. “Though we have gotten as big as we are, we’ve maintained that same feeling of mission we felt when we made the decision to work in a little natural-food store. That’s the rewarding thing.”