Sometimes you just marvel at how the best companies, when they recognize the existential threats they face, just pull out every stop and shock you with their strengths ... even as we should have presumed they were there all along, we just forgot they had them.
That's how I felt when I listened to the Whole Foods (WFM) shows last night. It wasn't a conference call, it was a full-bore, out-and-out demonstration that Whole Foods had met the enemy and it was itself. I cannot blame them. Walter Robb and John Mackey are among the two best merchants in the country. Whole Foods remains THE choice for people who want to buy food that is sheltered from the corrupt food chain.
But, the other guys caught on. Sure, they lacked the ethos -- I don't know if they will ever get that, or can get that -- but they figured out the merchandise. Plus, in the last two years, the stock market was incredibly kind and uncritical to companies that embraced the natural and organic theme and that allowed Sprouts (SFM), The Fresh Market (TFM) and Fairway (FWM) to raise a lot of money. Wal-Mart (WMT) and Target (TGT) figured out they had to go all in, so they called Hain Celestial (HAIN) and some of the other purveyors and wrote big checks to get the aisles chock full of natural and organics. Jim Sinegal, former head of Costco (COST), thought natural and organic was a fad and was slow to pick it up, but by the time he retired Costco had gone natural and organic with a vengeance.
And suddenly, there was Whole Foods being assaulted from all sides, without a strategy to differentiate itself beyond being the best at what it does.
I know, that sounds ridiculous. But that's where the existential crisis comes in. Whole Foods couldn't afford to be the best at what it does anymore, it had to be the best at what it didn't do: offer the best technology, the best convenience, the best affinity experience, the best advertising, the best home delivery, and what the heck, the best TAP!
Plus it all had to do it in no time flat, a self-imposed schedule because the people who run Whole Foods are the best at what they do...whatever it is that they chose to do. These are all early in their developments. And I don't want to overpromise what they can't deliver. Yet, the promise is there and you have to play the promise to win.
It's hard to find an analogue outside of Starbucks (SBUX), which recognized that having a really special cup of coffee in a cozy surrounding isn't going to cut it. You had to appeal not just to those who were already going to Starbucks, you had to appeal to those who wouldn't dare go into Starbucks or thought that Starbucks was just an overpriced cup of coffee and didn't even think there was a Starbucks experience.
Now, this isn't like an NFL team with a new coach with patient season ticket holders who are willing to wait a couple of years while he tinkers with the squad to get into the playoffs. Whole Foods has to appeal to the existing shopper base while wooing those who shop at competitors, and do so seamlessly without spending too much money because Whole Foods shareholders and potential shareholders insist that this team make the playoff or else.
I figured that with the changes that the company put through in the second half of last year, at some point this year we would see the impact.
I sure didn't think that some point would be Feb. 11th. That's astounding.
Best of all, the transformation was all done with the panache we have come to love from Whole Foods, right down to being the leader in Apple Pay (AAPL) and the best in speedy delivery. How speedy? Those of you who have screwed up Valentine's Day, go listen to the call. You could still bail yourself out of a jam with some responsibly grown roses that Whole Foods will get to your partner in time to save the relationship. Neither the old-dog-new-trick stores, nor the now-wilting recently IPO-ed chains offer anything like these now-essential amenities.
This weekend I happened to go into a beautiful Fred Meyer with my daughter. I have to admit it was a terrific experience because there were friendly people and nice bright aisles and some excellent natural and organic goods. I said to myself, darn, this very rural supermarket's catching up to Whole Foods, too. After tonight, I feel different. It's catching up to the old Whole Foods. The new one? Light years between them.