Whole Foods

I had a heated conversation a few years back with the former marketing head of Whole Foods. This was when their stock was around $70 and they thought their shit was priceless manure.

I was fishing for business and suggested that they didn't have any silver bullets and so could expect competition to do in much of their advantage over the next few years as they "taught" the rest of the market how to sell organics and take care of foodies.

The marketing expert was insistent that it was magic and that that anything they touched would soar. He actually said that Whole Foods products were price inelastic--meaning that it didn't matter what they charged. He was high as a kite.

My advice on how to grow their business--by adding a "dirty thirty" of products like Clorox and real mayo that consumers were forced to shop at Safeway or Dominics for was obviously ignored. (My idea--isolate them, put them on a back wall, and make them pay for the priviledge. Then use the $$ and relationship to clean up what you can of their practices. --Like trading with China instead of boycotting them. Just having WF be a one stop shop would mean a huge jump in sales.)

It's still a couple hundred million dollar idea, but who wants to work with someone struggling just to keep their spot on the middle of the totem pole? The corporate fear must be palpable--probably indirect proportion to the arrogance that they felt three years ago.

My point is it's hard to tell a top performer anything, even though studies show that improving top performers is a much more efficient way to grow than trying to "save" poor performers. A lot of times a brand must succeed and then fail before it gains any true legs--witness Apple, Starbucks, etc. It may seem like a natural process, but it can easily be avoided. There's also a lot lost in that early failure, somewhat like a corporate divorce--you can find love again, but making the first run work is a much better story and much more fun.

Their stock today is around 20. And the stock of Kroger--an old school grocery concern--has beat their performance soundly over the last three or so years. (Since we had the conversation.)

The atmosphere gets very heady around the best in the business--and no one wants to hear no or experiment. Success tightens people and brands up like nothing else, a lot of times it's years before they get back to anything even broadly resembling a freedom to which consumers can relate.

Can people really only innovate and go big when they're threatened with failure?