An interesting story in the Houston Chronicle says that Austin-based Whole Foods Market will be opening a spanking new store smack-dab in the middle of London this coming June. Does anybody out there doubt that Whole Foods CEO John Mackey has any plans for global expansion yet?
With the Continent a Chunnel ride away, it’s likely Mr. Mackey has his eyes set on Western Europe as I write this. Mind you: the new London store promises to open with a big splash. We’re talking an 80,000-square-foot plant here, which will make WF one of the largest supermarkets in London.
While the more reserved British don’t necessarily buy into the “bigger is better retail philosophy,” as the article states, there is no doubt that interest and sales in natural and organic food are growing on the other side of The Pond, as well. In fact, British supermarket chains have increasingly offered these products to consumers, just as American supermarkets have done. There is great potential for better and larger natural and organic assortments at retail, given the explosive growth of these categories, which has continued unabated over the past few years.
Given the interest in organic foods in England, which begins with Prince Charles himself, Whole Foods stands to benefit. HRH is an avid organic gardener and has publicly supported natural farming in his country as well as a ban on GMOs (refers to genetically modified foods). In fact, Whole Foods plans to carry the Prince’s own “Duchy Originals” organics within the London store. Whole Foods’ M.O. will also be to support the local organic growers and producers of packaged organic foods in England, giving them additional distribution for their products, importing additional products to flesh out categories in the process. Buying locally for local distribution is a wise idea.
Whole Foods is no stranger to the London market. In 2004, the grocer purchased Fresh & Wild, a small chain of seven organic produce stores. And the company has taken its time to study the English market, eyeing additional cities for future expansion in the country. Staff is already being hired, and a number of them have been flown to the U.S. to train in Whole Foods stores here. What better way to get to know the brand, and the level of customer service that is expected? Ultimately the new London store is expected to employ 550 people. The store’s assortments will include produce, perishables, frozen food, groceries, vitamins, beauty products and homeopathic remedies–long a mainstay of British medicine.
As an upscale store, Whole Foods expects to butt heads with the likes of Harrod’s and Fortnum & Mason, heralded for their gourmet food assortments with Londoners for generations. Not to mention supermarkets like Sainsbury’s and Tesco. Whole Foods VP David Doctorow: “We want everybody to be wowed at the start. It will be unlike any food shopping experience the U.K. consumer has seen to date.”
Questions:
* Do you think that the Whole Foods brand can be kept intact as it crosses the Atlantic?
* Do you think the British employees will get the internal branding they need to faithfully represent the brand so far from its American home base?
* Do you think the British consumers will readily embrace Whole Foods, or do you think it will take some time to take root in that marketplace?
* What are your other thoughts concerning Whole Foods’ expansion plans? I’d like to hear the thoughts of Daily Fix readers.
Having never studied this part of the market, I can’t say for certain, but I suspect Mr. Mackey has. The fact that he’s investing in a large store there, coupled with his previous successes, is evidence enough for me that Whole Foods probably can be successful there.
We’ll see, though. It’s entirely possible that WF will be hit with some unforeseen contingency for which they never planned or that Mr. Mackey isn’t as bright as I think he is.
I live quite close to the new shop, it is massive (relatively speaking) which is no mean feat, considering it’s next door to a (cavernous) Gap, Marks & Spencer and a selection of premium women’s clothing shops.
Few American retail experiences survive export unscathed, no matter how closely guarded by their brand masters. Europeans are both sceptical and cynical of the saccharine smiles prowling shop aisles across the US.
In particular, celebrated ‘American service levels’ are notoriously difficult to maintain here and I suspect Whole Foods will find it all-but-impossible to entirely replicate its traditional service offering. It doesn’t mean failure; it simply means a hybrid proposition will emerge, one more palatable to jaded Londoners.
The location is interesting, nestled at the centre of three (very) posh boroughs. I predict tough going for WF; well-heeled customers in this area are already served by a surfeit of healthy, premium shops. And M&S is an institution not easily displaced.
Parking is also an issue, with the congestion charge creeping ever closer. It is a major concern, considering the customer segment to which WF is appealing.
Brits won’t shop at Whole Foods London for the brand, and certainly not because it’s American. However, I won’t have a better analysis until I experience — and pay for — my first excursion.
Thanks, Cam and David, for some great observations. I’m especially interested in your insights as a Londoner, David. You’ve probably hit the nail on the head: “a hybrid proposition will emerge”. I’m sure if Londoners take to the new store, they will eventually put a uniquely English stamp on it. One thing: I would think the location work in WF’s favor since so many other upscale establishments are in the same area. You don’t think so, David?
Ted,
Besides offering a quasi-British product mix, I’m curious to see how Whole Foods will market and position itself in Europe. I’ve got a feeling the chain’s product mix, marketing and advertising will be “experimental”–subject to change–and that it will be honed over time to fit the bill. We’ll see.
The US “Whole Foods” is pretty pricey.. I’ve heard it referred to as “Whole Paycheck.” Which always crack me up… because that’s always my experience.
I wonder if the London store’s prices are more competitive?
Thanks for the input, Claire and Ann. Yes, I do suspect WF will be fine-tuning assortments, pricing and strategies once they make a beach head in the U.K. Consumers do expect to pay more for organic, natural and gourmet fare and they expect good assortments. We’ll all have to wait and see how this new store unfolds. Time will tell.
I look forward to David’s comment after he has made his first excursion, but I’ve made mine on July 2 and my diagnosis is that WholeFoods is in a whole lot of trouble in London.
Symptom #1:
Only one trolley was in use during my hour visit on a Monday at midday.
Symptom #2:
When I checked out my two items for £10, I noticed that most other shoppers had only a few items – mostly a snack for lunch. At this time of day other supermarkets are packed out.
Why are people staying away? They have had a PR blitz and there’s nobody who doesn’t know the shop is open. The high profile site has high visibility. It’s new, everyone likes new. There has been no lull in shopping generally – bombs or no bombs.
Possible reasons:
1. WholeFoods has allowed the perception in its PR that it is ‘Premium Price’i.e. not suitable for a weekly shop. WF can probably get a Premium Price but only after it has customers hooked. They need volume to turn the stock.
2. The offer is not a “Wow”. Harrods down the road has a similar offer. If they wanted everyone to be ‘Wowed’ from the start, as Mr Docotorow says, I am afraid they have failed.
3. One visit is not nearly sufficient to make a detail analysis, but it looked as if too much of the offer was based on US experience not UK practice. To give one example: Portion size looked too big – the locals don’t eat like this.
The retailing scene is rich with failed transatlantic transplants. Walmart failed in Germany, Sainsbury and Marks & Spencer failed in the US. The job is much, much harder than it looks. Wholefoods chose to send over management in late 2004 to run a tiny chain they had bought. I doubt anyone, however brilliant, can learn the ropes of a complex market in such a short time.
What to do?
Bluntly, new management with lots of good UK experience and a relaunch in September.
I assume this store is set to be the flagship of a UK chain – how else will they get economies of scale? This flagship is, at best, dead in the water and at worst sinking. Fresh food stock wont wait around for the customers to turn up.
One last word. I drive past the store daily. I have seen only one lady really weighed down with shopping. Good sign? Not actually, I recognised the lady, she used to work the check out at Sainsburys and must have moved to WholeFoods. Staff sales don’t count.
Well Nick…that shut Ted up !! and of course you are right. The store is dead in the water with few customers mountains of wasting food etc
Heavies at the door and actually only one door when the old Barkers had four entrances..what are they trying to protect ? ! cheese and wine ?
Nick,
Thanks for giving us an update on how WF is doing in its new London location. You’re right: many companies don’t make successful transplants into overseas markets. On the other hand, as I stated in my post, it takes time to tweak formats and marketing approaches sometimes to get it right for different markets. As is the case with any international city, London is filled with retailers at every level, and getting a share of the pie can take some time, if it happens at all. Thanks for weighing in.