Back in March 1995, my wife and I flew down to Austin to attend the wedding of a friend. While 
there, I went into a grocery store (probably to get us some snacks) and was amazed. It was the first time I had ever been in a really nice grocery store. Sure, I had been in places like Safeway dozens of times, but this one was really……….nice. This was years before chains like Whole Foods were well known. I don’t remember the name of the small chain down in Austin, but everything was so well-organized, tasty looking, and clean. I never wanted to set food inside a Safeway again.
A few years later, the first Whole Foods in all of California opened up about a mile from my house. (It’s the same one which I’m walking by in my Tim Knight meets Steve Jobs video). Even though it’s pretty small for a Whole Foods, it’s still the principal place people in town go who want good groceries.
Back during the financial crisis (Tim looks wistfully off into the distance…..…..) Whole Foods got absolutely slaughtered. After it bottomed in early 2009, it began an enormous ascent, beating its highest prices of 2007. Recently, however, it has started breaking down (eerily just like it did before the financial crisis). The public isn’t as eager to shell out money hand over fist for groceries, I suppose. The stock (which I’m short) has plenty more to fall.
The reason I bring this up is that, based on Whole Foods’ famed success, imitators have begin popping up. One form of imitiator are giants like Safeway which allocate a portion of their store to organic goods. Typically it’s a small section of the produce department, and the goods they put on display look like they’ve been sitting on a truck for a week. It’s no surprise that no one buys them.
The more relevant competition are firms like The Fresh Market and Sprouts Farmers Market, both of which have appeared here in town. I am a fan of analogies, as you know, and I’ll say this: Fresh Market is to Whole Foods as The Beatles are to The Monkees. One inspired the other, but the latter is far lamer than the original.
They’re both public, by the way, and their lameness is reflected in their plunge to lifetime lows. I think much, much lower prices are in store for all concerned. TFM is popping higher after hours right now, but long-term, I think these imitators are going to continue on a downward path.
