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Q&A: Whole Foods Markets' Walter Robb

Whole Foods Markets opened its first store 30 years ago in Austin, Texas. Today there are nearly 300 in the United States, Canada and Britain.

Walter Robb, the co-chief executive with founder John Mackey, talked about his two decades at the company, including navigating through a tough recession and the company's plans for the Washington region, with journalist Sam Fromartz. Excerpts follow:

Whole Foods is turning 30 on Sept. 20. Are the core values that have driven the company still alive?

I've been here a little over 20 years, and first got into the natural foods business in 1977. Arguably the biggest shift has been in Americans' view about natural and organic food: that there is a value to it, that it's connected to ideas of health, wellness and sustainability. These ideas have gone mainstream and are gaining momentum. I think Whole Foods has played a significant role in helping that shift to happen.

As these ideas get more widely embraced, does that make it harder for Whole Foods? Or easier?

Both. John recently told me that in his first year in business he lost over half of his investment and there was a question of whether he could continue. We're not in that kind of position any longer. But we're more a target than we were before because we're more visible. We're under more scrutiny, but I think that's a good thing because it helps us to a higher standard.

At the same time, that visibility has given us an incredible platform, so that when we decide to put a stake in the ground around an issue it will move the needle.

One of the best examples of that now is with our new seafood sustainability program. Every fish in the store is labeled. We won't sell the red-label fish any more. [Monterey Bay Aquarium's Seafood Watch and Blue Ocean Institute advise to avoid fish on their "red" lists.]

Finally, we're putting a lot of attention on healthy eating. John personally is leading this effort.

Is that changing the product mix in the stores, or emphasizing products that already exist?

Over time, the customers will decide that. Right now, though, they're buying much more produce. They're going nuts over greens.

Really? Because you emphasize the nutrition content of veggies?

Yes, with the Aggregate Nutrient Density Index. And that index shows vegetables are the most concentrated form of nutrition, pound for pound. We're seeing people respond to this information, even in just the first inning of the effort.

What effect has the recession had on the company?

We began to feel the effects of it earlier than perhaps some others. We started out 2008 with 10 percent comparable store sales, and by March we were dropping every week.

I think the most painful thing about it was that people saw us as less relevant, less in step, and that they didn't need us any more. Psychologically, it was crushing after 20 or 30 years of work. Customers were leaving us in droves.

So we suspended the dividend, cut capital spending in half, slowed down growth and ended up taking on an additional investment to make sure people knew we were stable.

Those are all financial measures.

Yes, and they were difficult. Then we eliminated 100 jobs; that was hard, too.

But toward the end of 2008 we hit the bottom of our sales decline and we found out there was a group of customers who really believed in Whole Foods. They stayed with us. We had that as a foundation. As we began to examine customer feedback, the heart of it was we were too expensive in certain areas.

But you were saying for a long time that was a misperception, that you weren't more expensive.

We think people were missing the value we offered, but we also knew there were places where we could do a better job. So we started to get very aggressive on selected value, particularly in the perishable areas. We adjusted our pricing, bought better and upped our promotions. We became a whole lot more competitive.

Do you actually know that?

We put together a research team in Austin and they now are tracking 64 competitors in 12 major markets every 30 days. So we know exactly where we're indexing against major competitors. So when we say we're being more competitive, the point is, we actually know.

Are you now consciously de-emphasizing the "foodie" merchandise in favor of health?

I think they're both in the DNA of Whole Foods. But perhaps during the decade of excess the foodie thing got a little out of balance. And, look, some of those things -- the culinary traditions, artisanal food production -- are wonderful things and are reflected in the re-emergence of local foods.

What are you doing in the Washington region?

I was at our P Street store two weeks ago. It's a major remodel. We also announced a new store we're opening in Foggy Bottom, at 22nd and I streets NW. And we're working on Charlottesville and on relocating a store in Rockville.

I had heard Whole Foods was looking at something by Nationals' Park before the recession hit.

That's right. No comment.

It's not too far from where I live in Capitol Hill.

Well, let me tell you this: At some point you'll be a happy camper.

By Sam Fromartz  | September 17, 2010; 7:00 AM ET
Categories:  Shopping  | Tags:  Sam Fromartz, Shopping  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Market Roundup: Sept. 16-23
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