Whole Foods Gets Some Competition

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Should Whole Foods watch its organic back?

With customers demanding more organic and natural foods, traditional grocery stores have begun to increase their organic offerings. Some foreigners are trying to win over American consumers too.

According to the Pittsburgh Post-Gazette, shares of Whole Foods Markets rose slightly yesterday following news that Fresh & Easy, a competitor chain owned by British company Tesco, is slowing its new U.S. store openings for a while. Still, Whole Foods closing price of almost $33 is a drop from the $53 set in early October and far from the $70 levels of early 2006.

Meanwhile, large national outlets such as Walmart have announced a deeper commitment to organics.

However, Jim Hertel, senior vice president of consulting firm Willard Bishop in Barrington, Ill said in the article that it's still up for debate how much the growth in organic alternatives has affected Whole Foods. Burt Flickinger, managing director of Strategic Resource Group, a retail consulting firm in New York, added, "Whole Foods tends to have a very loyal consumer constituency."

The article suggests Whole Foods, which has 270 stores and lists 90 in development, has plenty of distractions. For example, the company's acquisition last year of Colorado-based rival Wild Oats still has the Federal Trade Commission arguing that it will hurt consumers and that the courts should block the merger.

Whole Foods has said it expects sales in established stores to grow between 7.5 percent and 9.5 percent this fiscal year, excluding the acquired Wild Oats locations.

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