Natural Markets Still Sewing Their Wild Oats

Apr 18, 2003

At an investor conference earlier this week, Wild Oats Markets cfo Edward Dunlap portrayed the natural foods market as one with plenty of elbow room. “We have a significant growth opportunity in a large and highly fragmented market,” said Dunlap.

Wild Oats sees the potential to add as many as 400 new stores to its present chain of 102, starting at a pace of 10 stores per year and reaching 25 new stores per year, once they hit their stride. According to Dunlap, his company has 3 percent of the total market, while Whole Foods Market holds about 7 percent. Three-quarters of the U.S. market is “unpenetrated by either one of us,” he said.

In planning their expansion, the company has signed 21 leases or letters of intent in 11 markets. Of those 21 new stores, 12 stores are expected to be opened under its Wild Oats brand and nine farmer’s market-type stores under its Henry’s Marketplace brand.

Wild Oats’ new stores will push beyond their current average size of 21,000 sq. ft. to between 26,000 and 28,000 sq. ft. The new Henry’s stores will be between 23,000 and 25, 000 sq. ft.

Moderator’s Comment: What is the ultimate growth potential
for natural foods chains?

According to chief executive Perry Odak, only 9 percent
of Wild Oats customers shop primarily at their stores. A key challenge will
be to convince existing and new shoppers that they need to visit more frequently.
As natural and organic products filter into mainstream American life, it would
seem that Wild Oats and Whole Foods should have an easier and easier time making
that case. [Rick
Moss – Moderator

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