Whole Foods was founded in 1980 by the eclectic John Mackey with one simple goal: getting people to eat healthy by adhering to the strictest of food quality standards in the industry.
Obviously that has historically meant high prices to shop at Whole Foods and the outrage of consumers. But, people still show up every weekend because Whole Foods offers something different not found in the food aisles of Walmart (WMT) - Get Report , Kroger (KR) - Get Report and Target (TGT) - Get Report .
In effect, Whole Foods has created a mystique around its brand ... a mystique that the king of pushing volume and cheap prices (and Whole Foods owner) Amazon (AMZN) - Get Report appears to be slowly dismantling. The likely reason by Action Alerts Plus holding Amazon is to earn a nice return on the $13.4 billion it spent to buy Whole Foods.
Or so opines the always outspoken (and well-researched) Barclay's analyst Karen Short in a new note:
"Since we began publishing our in-store observations last fall, we have noticed many instances of Whole Foods' merchandising becoming more "conventional" while still not technically deviating from its very long list of "unacceptable" ingredients. Changes include: prominently selling items such as Domino sugar, Vitamin Water, Dylan's candy among others, and signage in stores prominently featuring food not typically thought of as "healthy" such as pasta, pizza, chocolate, etc. In our view, while technically staying true to the company's core values - the shift still comes with risk (as well as opportunities). If not done successfully, Whole Foods increasingly becomes just another grocer - which could create a meaningful opportunity for other specialty players to take share (e.g., Sprouts (SFM) - Get Report , Natural Grocers (NGVC) - Get Report , Earthfare)."
Next up for the inside of Whole Foods: a McDonald's (MCD) - Get Report pop up shop that hawks organic Big Macs. That would go a long way to accelerate the building view that Whole Foods is not too different than a typical supermarket.
Regardless, the mass-marketification of Whole Foods may have Mackey looking back in a few years at these comments with disbelief.