Whole Foods Effect

July 22, 2006

Comments

Today’s WaPo business section fronts a story about the socio-economic symbolism of Whole Foods.

Here’s one for the B-school textbooks: the Whole Foods Effect. Homeowners, real estate brokers and builders see the natural foods powerhouse not just as a grocery but also as an engine for development. In Pittsburgh’s East Liberty neighborhood, a Whole Foods is credited with triggering a revival. In Sarasota, Fla., developers say they pre-sold all 95 apartments in a condominium tower because a Whole Foods opened on the first floor. And in Washington, many trace the revival of Logan Circle and the 14th Street corridor to the opening in 2000 of a Whole Foods on P Street NW.

[…]

The hunger of some residents for the cachet of Whole Foods is stirring unease among working-class residents who worry they will be forced out by new affluence and among longtime retailers who are struggling with rising rents and sagging sales.

I shop Whole Foods (on Duke Street in Old Town Alexandria) regularly because of the high quality food, excellent customer service, and convenience. I’m willing and able to pay a premium for those things and Whole Foods is thriving by catering to those who are.
OTB roving correspondent Richard Gardner, who sent me the link to the story, refers to the chain as “Whole Paycheck” for good reason.

While I understand the concern of those who fear that upscale development will drive the poor out of the inner cities, there’s a chicken-egg dynamic at work. While it’s probably true that the existence of luxury amenities like Whole Foods stores will encourage more affluent people to move into a neighborhood, it would only happen toward the end of the gentrification cycle. One doesn’t put such a store in a depressed neighborhood, for obvious reasons.

4 responses to “Whole Foods Effect”

John Burgess

July 22, 2006 at 10:06 am

Living in Sarasota, I’m familiar with (and occasionally shop at) the Whole Foods mentioned.

I think there’s a better reason for the total pre-sale of those condos, though: the Sarasota real estate market is extremely hot. A 2,500+ house development was completely pre-sold before ground was broken for the first structure a couple of years ago.

Whole Foods is in an extremely good location (as, therefore, the condos). It’s right downtown, a block from the public library and perhaps three blocks from the Gulf of Mexico. Lots of restaurants, theaters, clubs within walking distance.

I notice that Whole Foods here is most busy during the winter, when the snowbirds come flocking down. That may be due to their living in the area, or the fact that they are, almost by definition, upscale economically. Whole Foods is the biggest purveyor of organic foods, so they sort of have that market locked.

There are several competing grocery store chains in the area: Publix, Winn-Dixie, and SweetBay. The last is very high quality, but considerably cheaper than Whole Foods across the board. Meat and fish, for example, are between 1/3-1/2 less expensive. Their organic selections, though, are far more limited than Whole Foods.

I spend a lot of time in DC, too. I notice that Whole Foods on Wisconsin Ave. (in “Upper Georgetown”) is having a heavy impact on the Georgetown (“Sexy”) Safeway, a few block down the street. Safeway seems to be in some turmoil, trying to realign itself–at least locally.

I notice, too, that many in Georgetown do their basic shopping at Safeway and go to Whole Foods for top-quality meat and fish and, occasionally, produce. It’s all an interesting market dynamic.
vnjagvet

July 22, 2006 at 6:20 pm

John B.

That’s precisely what they do in Atlanta as well.

Kroger, Publix, and even Costco and Sams for staples, Whole Foods for the “gourmet” stuff and sometimes wine.
DC Loser

July 22, 2006 at 9:07 pm

And then there’s Wegmans. Ever since they opened a store in nearby Fairfax, we’ve done more and more of our “gourmet” and day to day shopping at the store. They have the best combination of high end groceries and a regular supermaket at prices that beat the chain groceries. No wonder other places are begging Wegmans to open stores in their areas.
James Joyner

July 23, 2006 at 8:54 am

A Wegmans opened a couple miles down the street from me when I was living in Ashburn. The problem I had with it was that it was always packed and thus inconvenient.

But, yes, the huge downside of Whole Foods is that it’s just not usable as one’s only supermarket. Not only do they not stock such things as name brand cereals, breakfast foods, ice cream, and the like but they are ridiculously overpriced for such staples as milk and eggs.