Whole Foods Market Kensington, London

Busy Londoners are used to skyrocketing prices. Still, they may frown when confronted with prices at the Whole Foods Market on Kensington High Street. Nevertheless, the biodegradable paper and plastic bags of the American organic retailer are becoming a new status symbol in the affluent London area.

Elsevier Food International, Vol. 10, Number 3, September 2007
Jos Poels

Last 6 June was a heyday for Whole Foods’ management when the first Whole Foods Market in Europe opened its doors in Kensington, one of London’s affluent areas. PlanetRetail states that this three-floor store cost almost three times more to build than a conventional US store (US$7 million compared to US$2.4 million) so that may well explain its high price levels.
At home in the US, Whole Foods Market developed from a small Texan retailer into Americas leading organic retailer, with 200 stores nationwide. As the ‘organic Wal-Mart’ it sells not just food but also non-food purchased from small eco-friendly manufacturers. You will not find a single bottle of Coca-Cola or Pepsi in its stores. It sells fresh meat, fish, vegetables, yoga mats, body lotion and peanut butter. For the latter you can grind your own peanuts at the store that sells only food without artificial sweeteners, colourings, additives or preservatives.

Fifty-five chefs in one store

Store characteristics Sales area: 7,500 m2 Number of checkouts: 28 Number of employees: 500 (full-timers and part-timers) SKUs: 30,000 Opening hours: 8 a.m. – 10 p.m. (on Sundays from noon to 6 p.m.)

Despite the growth potential Whole Foods still has in its vast domestic market, it decided to expand the business abroad. Since 2003, Whole Foods has also been active in Canada, where it currently has eight stores. For the long term, Whole Foods’ founder and chief executive John Mackey decided to cross the Atlantic. As there are no language barriers in the United Kingdom, the American organic retailer opted for the upmarket London Kensington area. With 80,000 square feet, the store is not only Whole Foods’ largest to date, it is also London’s largest food outlet. It is complete with in-store restaurants and cookery classes.
Britain was, according to Mackey, chosen because of the tremendous potential it offered. He declined to reveal how many outlets Whole Foods Markets is planning in the UK. “We are obviously not here to do one store. We have plans for the UK and the continent,” Mackey said at the launch of the Kensington store. “We’re saying by 2010 we expect we can have 300 stores in the US. The UK and Europe are around the same sized market. Maybe we could have something similar here.”
In the UK, Whole Foods enters a difficult organic market. Most UK supermarket chains, such as Tesco and Sainsbury’s, have embraced organic food over the last couple of years. Customers do have a choice, as organic – a fraction more expensive – is displayed next to the ‘ordinary’ variants.  The UK market has seen a growth in demand for organic of 30 per cent per year. According to the Soil Association (the UK campaigning and certification organisation for organic food and farming), the British organic food market recorded sales of €2.8 billion in 2005. Not all organic products are bought in shops but are home-delivered to tens of thousands of British customers. Through a subscription service a box of organic seasonable fruit and vegetables is delivered to their homes once a week.
Kensington Whole Foods’ is a prestigious flagship store, employing 500(!) people. There are 55 chefs on site using the same ingredients found in-store. The shop has trolley escalators and even has its own DJ.
Ninety-five per cent of foods are UK sourced. Still, an analyst from PlanetRetail in London noticed large quantities of imported organic foods in the Kensington store. Private label accounts for 17 per cent of all Whole Foods’ grocery and HBS sales, or eight per cent of its total sales. Analysts estimate the Kensington store could have a turnover of €75-90 million a year.

Organic Harrods
As organic is becoming mainstream in the UK, Whole Foods Market is not teaching the British anything new. There is the odd ethical shopper, but many consumers have started to buy organic not because they care about the earth but because organic is perceived as healthy. Some of the local newspapers are criticising the pricing, the wastage and the foodservice. One reporter noted the in-store display of eco-friendly windmills that were powered by a fan which was plugged into an electricity socket.
Throughout the Whole Foods store there is a strong focus on counters. Butchers, delicatessen and fishmongers prove quality and variety of the products for sale.
Despite the vibrant exciting atmosphere the new Kensington outlet displayed the first weeks after openings, it will suffer from its pricing. Rents in Kensington are notoriously steep and Whole Foods Market has very high staffing levels. To make a profit, the American retailer has to generate exceptionally high footfall levels. It will merely be an expensive marketing tool for Whole Foods at large, instead of a profit centre. The London Whole Foods premises are a showpiece and have the potential to develop as a tourist destination, just like the department store Harrods. It can help spread the Whole Foods concept over the rest of the continent. Kensington cannot, however, be the model for the rest of Europe. The store has no car park and it is located on a buzzing London shopping street. It should be seen as Whole Foods Market’s European allotment. From High Street Kensington it will develop strategies for the rest of Europe. After the UK, the organic chain is likely to penetrate into France, Italy and Germany.
In Kensington, Whole Foods Market faces fierce competition from established retailers. Tesco launched a Whole Foods range after the American organic retailer announced its UK entry two years ago.  Nearby Waitrose has refurbished its store, the new concept of which is to include more premium-fresh ranges and counter-served healthy meal options. Other specialist organic-based London retailers, such as Planet Organic, have also been refurbishing their stores.