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Should Whole Foods Buy Trader Joe's?

NEW YORK ( TheStreet) -- I'm watching Howard Schultz build an empire at Starbucks (SBUX - Get Report). Outside of Apple (AAPL - Get Report) and (AMZN - Get Report), there's not another company -- across spaces -- doing what Starbucks does, as well as it does.

Starbucks is a tech company in a retail coffeehouse's clothing. At first blush, you might place them on the same level as Whole Foods Market (WFM - Get Report), but Starbucks really is the superior company for the long-term.

On most days, I have nothing even remotely negative to say about Whole Foods from consumer and investor perspectives. Love the company. Really like the stock. However, when I conduct a multi-method stock market ethnography that puts Starbucks and Whole Foods side-by-side, I start to see flaws. Let's explore them over a bottle of Cherry Chia Kombucha and a venti Chai Tea Misto, 1/4 hot water, 3/4 steamed soy milk, plenty of foam.

We'll get to the all-important Trader Joe's stream of semi-consciousness in a minute, but Starbucks doesn't dominate because of scale and size; it wins because it's cutting edge.


Thanks to TheStreet's Robert Weinstein, I got my hands on a Starbucks Steel Gift Card. This is the premium-quality SBUX card, loaded with $400 and on sale for $450 in a limited quantity of 5,000. They sold out in minutes. And now, they're popping up on Ebay for outrageous prices with a majority of the actual bids coming in as high as $700 to $800.

I was thrilled to get my hands on one. As a relatively new Starbucks addict, I'm grateful to Robert. Why is this relevant? It's relevant because the Starbucks iPhone app I downloaded a few months ago has made me a loyal customer. I hit Starbucks at least once a day now; sometimes twice.

The app got me in the door. Combined with friendly baristas and a solid drink, it keeps me coming back. Talk about driving engagement. That's exactly what the app does. It's exactly what Starbucks intended it to do. It's brilliant. Play with the app. If you don't walk away with a better understanding of what I mean by Starbucks is a tech company you're not taking the papers.

Whole Foods needs to do something like this. The standard Whole Foods customer, at least in my neck of the woods, is the typical Starbucks customer. They're tech-savvy, iPhone-toting modern-day yuppies who already have or are starting to have guppies. Playing with an app in a grocery store is the ultimate diversion from the everyday monotony of life.
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AAPL $118.23 0.36%
AMZN $666.31 -1.00%
SBUX $61.55 -1.00%
SWY $35.10 -0.11%
WFM $28.97 -1.50%


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