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[15 comments]

Whole Foods pursues 'higher purpose' in nation's capital

March 28, 2014

Whole Foods is doing that conscious capitalism thing again. The retailer announced that on April 5 it would launch a monthly fresh food market on the former campus of St. Elizabeths Hospital in an impoverished area of Washington, D.C.

Scott Allshouse, Mid-Atlantic regional president for the grocery chain, said the move was part of Whole Foods' standard practice of pursuing its "higher purpose." The grocer plans to donate 100 percent of the profits it makes from the pop-up market back to the community.

Whole Foods will sell products from a food pavilion built by the city. The chain is also going to lengths to keep prices down so that locals will be able to afford the foods it is selling.

"I think people will be pleasantly surprised," Mr. Allshouse told The Washington Post, "because they've been hearing we're expensive, we're expensive, but they're getting a can of beans for 89 cents, they're going to get vegetable broth for $1.99. ... They're going to be able to feed their family for under 10 bucks."

D.C. Mayor Vincent Gray, who is running for reelection, sees Whole Foods participation as a victory for the area's residents. While it's true the grocer will only be at the site one day a month, it is an improvement over the current schedule, which Mr. Gray told the Washington Business Journal, "is once-every-never."

FINANCIALS:     [NASDAQ:WFMI] [ ]

Discussion Questions:

How much do you think consumers are influenced by reputation when it comes to deciding to shop at a retailer? Will corporate acts of social responsibility become more important or less to top and bottom line performance in the years ahead?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Have you chosen to shop or not shop at a retailer because of its policies on issues such as labor relations, environment, political contributions, etc.?

Comments:

It appears the Millennial generation cares quite a bit about social issues. So I think it can only enhance a retailer's reputation to be socially relevant. That doesn't mean the shoppers don't care about price, they do. But all things being equal, a good Karma retailer will get more support.

In full disclosure, I am pretty passionate about Conscious Capitalism. The notion that corporations exist solely to enhance shareholder value ignores the obvious - those corporations also have a responsibility to the communities within which they operate and their employees.

Whole Foods has always been really good to its employees. It's nice to see the company starting to give back to the community as well.

I understand this is a somewhat nascent movement, but it's coming, and I hope to see real change within my lifetime. And I answered an emphatic "Yes" to the poll question.

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Paula Rosenblum, Managing Partner, RSR Research

If you do something nice for the purpose of bettering your bottom line...is it still "conscious capitalism?" Or is it merely another clever investment with good PR value?

As Tim Cook told an investor the other day, "If you think all our decisions are based on the bottom line, go invest someplace else." I'd like to think, and do, that Whole Foods is doing good to do good. When you're blessed, you bless.

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Ian Percy, President, The Ian Percy Corporation

This is a nice move by WF, but I'm not convinced it's all that altruistic - this is Washington after all.

Reputation or perceived reputation is a big deal to consumers. You name certain brands and they have distinct reactions. In this case though, WF has a reputation for higher than average prices, so the shoppers visiting this market will probably take some extra convincing. If they like the experience and visit a real retail location, they make come away with a change of heart.

For that reason, I think social responsibility can be a slippery slope. Companies that build a brand around it attract certain consumers and model their business differently than brands that do occasional "acts of good" which can be perceived as disingenuous and ultimately hurt the bottom line.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Paula's comments above are perfectly aligned with my own. You can't be in business today just to make a buck. Sure, there's a responsibility to shareholders. But I believe there's a bigger responsibility to the employees (see Costco for a good example, and the banks for the worst example) and the community.

Whole Foods should be applauded. Whether or not this boosts their bottom line is irrelevant in this case.

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Kevin Graff, President, Graff Retail

This story is nothing less than astonishing.

The Congress Heights area where Whole Foods will pursue this project has no full-service grocery store. Whole Foods' customers should be so impressed that they are addressing the food desert issue here. Customers will be happy to pay a little higher price (much as Tom's shoes customers do) with the knowledge that they are contributing to the larger community. Kudos to Whole Foods.

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Cathy Hotka, Principal, Cathy Hotka & Associates

We all have a conscience. When a company like Whole Foods displays their empathy for others in need, it creates good will. This appeals to our higher sense of wanting to help others.

This type of act of social responsibility is an excellent way to build good will and trust with your present and future client base. Jay Conrad Levinson and others have written on this excellent premise to build your brand in the marketplace. It works!

Tom Borg, Business Expert, Tom Borg Consulting, LLC

There is no doubt that the bifurcation of the US society is increasing and must be addressed. A successful democracy depends on a strong middle class. Corporate profits have been a huge bright spot. To see corporations making an investment toward a solution only makes sense and I believe it can help those corporations compete.

Supermarkets have traditionally been "tactical" advertisers, focusing on this week's specials. Manufacturing businesses have typically focused on "strategic" advertising, with broad themes such as "better living through chemistry," "Intel Inside," etc. Whole Foods will receive a lot of goodwill advertising while at the same time helping out the US society.

The various political sides will argue the right way to address the declining middle class but corporate activism is certainly one way to begin. Who knows, it might even be profitable for Whole Foods.

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Bill Bittner, Principal, BWH Consulting

This is a step in the right direction, although a monthly market serves only to emphasize, and not really alleviate, the food desert situation. I'd be impressed if Whole Foods really made urban food deserts its "signature" issue.

As for how this might improve the chain's business, my feeling is that few shoppers will make a company's perceived ethics a primary factor in choosing where they shop; the halo effect of this market probably won't make customers drive further or pay more. It will influence some customers who feel they're choosing amongst competitors that are otherwise about equal, i.e., they want to feel good about themselves by shopping at stores they feel good about, but they don't want to pay more, or go out of their way to do so.

Mark Gardiner, Communications Strategist, revolutionaryoldidea.com

Healthy eating has so many benefits that the NIH needs to take note to see how this Karma plays out with respect to outcomes.

Whole Foods can score if this turns into an Upworthy video, and that in turn, may drive others to do the right thing. I just wish they would do more with local farmers. Nice move WF.

Vahe Katros, Consultant, Plan B

A small grouping of consumers puts ethical choices at the forefront of their decision-making. It's a really small portion of the market, judging by the success of food coops and fair trade businesses. How such ventures affect overall perception is another matter.

Regardless of that this is a pr move. There are two mainline grocery stores, a Giant supermarket and a Safeway supermarket within a mile or two of where Whole Foods will be doing this.

The city should expend more resources in supporting access to the existing options and improving them, rather than continuing to attract " more options" to an area that lacks the financial capacity to support them all (e.g., a Walmart will be opening within a couple miles of here too, by 2016). The heavily subsidized development where the Walmart is going is close to the preexisting places, one of which also received city subsidies.

Richard Layman, Consultant, Retail Empire LLC

I agree with what others have said. Such acts may or may not become more common, but publicizing them definitely will. But were they uncommon in the past? Hudson's - and by implication many other department stores - kept open their cavernous flagship for many money-losing years, thus offering shopping opportunities in what could properly be called a "soft goods desert," but seldom publicized their plight. Was this an act of corporate responsibility, wishful thinking...or just plain dumb?

'notcom'

Apparently I'm a cynic today. Whole Foods' announcement is definitely more to appeal to, and to gain goodwill from its regular affluent shoppers who may appreciate the firm's "social responsibility", than it is to make any real difference in the lives of "the needy". I'm not convinced of any bottom line value here. But as I already admitted--I'm a cynic. :)

'Liatt'

Social responsibility will become more and more important as consumers look for differentiating reasons to shop at any given retailer.

Millennials, in particular, demand more ethical and socially conscious corporate behavior. As a measure of success they value "doing good in the world " right up there with corporate profits.

In our world of abundance, where so many of us have all the "stuff " we need, consumers are looking for compelling reasons why they should buy YOUR stuff. Having a greater purpose and deeper meaning is a powerful way to connect to that emotional need and stand apart from your competitors.

Besides, doing the right thing just feels good.

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Lance Thornswood, VP/Managing Director, inRetail

Perhaps one of the greatest case studies for conscious capitalism is Richard Branson's Virgin United. People who believe in Sir Richard's causes are also his companies' brand evangelists. There is typically a percentage of customers from a business that is socially conscious that will do business with the company for that very reason. These customers just love what the company stands for, therefore they support them.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Independent grocery retailers have done this for generations. It is nothing new. As they slip a bit more into history each year, it may seem like something new, but it is FAR from it. What WF may be capitalizing on is the void that has become evident by their absence from the market.

Are they doing it for their bottom line? Or, are they doing it as a part of "conscious capitalism"? Isn't that a distinction without a difference?

Even good ol' independent grocers knew that if they catered a seniors dinner at the local center, took care of a fund raiser at the local hospital, feed lunch to the local union hall for their picnic, or took care of the parish dinner at the local church on Sunday afternoon, it was to their benefit in the long run.

It is absolutely nothing new in the business sense, but it simply may be something "chain" retailers have discovered the benefits of as they continue to displace the independents that took care of their communities for generations. The difference was where they remain and those that are gone is that they were actually part of the communities and understood the needs and responded to them. They sought no press releases of faint that it was some new concept. It is far from NEW. It is simply good community business.

'Scanner'

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