Wild Oats Stores

Whole Foods Market will step aside for expansion

The Whole Foods Market in Upper Arlington will move next week from one site in the Shops on Lane Avenue to another.

The organic- and natural-foods retailer's current store, at 1555 W. Lane Ave., will be torn down. The 22,000-square-foot building that housed a Wild Oats market until Whole Foods bought the chain in 2007 will be replaced by a building that, at 35,000 square feet, is nearly 60percent bigger.

Whole Foods stores average 31,200 square feet. And the trend is to get even bigger, with stores built in the past two years averaging 36,500 square feet. The nearby Dublin-Granville Road store is among the five largest in the chain, at 75,000 square feet.

Whole Foods said it is expected to take 18 months to build the new store, which means it should be completed about the end of next year.

 The changes will begin on Tuesday, with a closeout sale at the current location. The next day, Whole Foods will open at a much smaller, temporary location at 1649 W. Lane Ave.

The shuffling of sites and eventual expansion was welcomed by management of the shopping center, who called Whole Foods Market "a marquee tenant."

"Their updated store will allow for a more desirable shopping experience and will offer additional amenities to the Upper Arlington area," Billy David Andrews, general manager of Ohio and Indiana properties for Ramco-Gershenson, said in a statement.

Although the temporary store will be less than half the size of the current store, it will contain the majority of items in a regular-size store, Whole Foods spokeswoman Defausha Hampton said.

"In fact, some areas like wine and cheese and personal shopping will expand," Hampton said. If an item isn't in stock at the smaller store, the staff will special-order it or bring it over from Whole Foods' Dublin location, she said.

Because parking will be tight, the temporary store will also offer curb-side loading and carry-out assistance.

Whole Foods' closeout sale at the current location will begin at 8 a.m. on Tuesday and continue until 4p.m., "or while supplies last," Hampton said. "At Charlottesville (Va.), we did a sell-down similar to (Lane Avenue), and people got in line at 4 o'clock in the morning. It was quite the sight. The line was wrapped around the building."

Then, at 10 a.m. on Wednesday, Whole Foods will hold a "bread-breaking ceremony" - the company's version of a ribbon-cutting - at the smaller store, followed by the official opening with free tastings and giveaways.

Whole Foods Acquires Wild Oats « Brand Autopsy

Whole Foods Market acquired is largest competitor , Wild Oats , for $565 million along with assuming Wild Oats’ existing net debt of $106 million. When the deal closes, Whole Foods will operate more than 300 locations in 31 states along with stores in Canada and in the United Kingdom.

Founded in 1987, Wild Oats operates 110 stores with annual sales of $1.2 billion. In comparison, Whole Foods was founded in 1980 and operates 193 stores with yearly sales of $5.6 billion.

Wild Oats has historically underperformed. Its sales per square foot of $450 is half what Whole Foods is able to generate and the company is currently in a major transition period operating without a CEO or CFO. On the conference call with Wall Street analysts, Whole Foods CEO, John Mackey, called the acquisition “highly opportunistic.” Mackey went on to say the timing was right to approach Wild Oats about a merger given the “strategic gap” at Wild Oats as evidence by the lack of a CEO and lack of a clear company vision.

Wild Oats has significant penetration in the Rocky Mountains, Pacific Northwest, and Florida … regions where Whole Foods’ penetration is weak. Whole Foods believes it can significantly improve the operations of Wild Oats locations resulting in higher sales on a per-store basis. The addition of new stores and the productivity improvement in these stores will positively impact Whole Foods’ comp sales figures.

But the real benefit, as I see it from the perspective of a former Whole Foods National Marketing Director, is this acquisition helps to solve Whole Foods Market’s greatest challenge. As I wrote in this blog post , the biggest challenge facing Whole Foods is its inability to open new locations.

In 2006, Whole Foods opened only 13 new stores yet the company proudly informs Wall Street they have 90+ stores in the development pipeline. Given their current rate of opening new stores, it will take Whole Foods at least six years to open the 90+ stores they have in the pipeline today.

By swallowing Wild Oats’ 110 stores, this immediately solves Whole Foods new store opening challenge. Sure, Whole Foods will close some of the Wild Oats locations and relocate others but the net/net will be a significant increase in the Whole Foods store base. This increase in the Whole Foods store base will have a positive impact on comp store sales.

Remember, Wild Oats locations are only able to generate $450 per square foot compared to the $900 Whole Foods is able to generate. Whole Foods is very confident they can improve store operations at these locations to drive sales. On the conference call with analysts , Whole Foods management talked about how they have been able to successfully increase sales on a store-level basis in all 18 of their previous acquisitions.

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