Media in the New Millennium

Boulder got snowed by Whole Foods in 2007. The last drifts melted on Friday, when the Austin grocery chain announced it reached a settlement with the Federal Trade Commission over its purchase of Wild Oats Markets and would jettison two Boulder stores it once promised to treat with “reverence.”

In order to get the FTC to drop its anti-trust case, which was based on the notion that a WFMI-OATS tie-up would create an unfair monopoly in natural retail, Whole Foods gave up …. nothing, really:

• Whole Foods will divest 19 Wild Oats stores that are already closed. Nine of them were closed by Wild Oats before the merger.
• Whole Foods will offer 13 operating stores for sale, including two outdated locations in Boulder, the original Wild Oats at Baseline and Broadway and the original Alfalfa’s Market at Broadway and Arapahoe.
• Whole Foods will offer the Wild Oats trademarks for sale. Don’t all jump at once.

More than two years of our tax dollars at work for this? FAIL.

While Whole Foods CEO John Mackey says it will be “business as usual” at the stores, Jerry Lewis notes on his Boulder Report blog that the Baseline Whole Foods is already discontinuing inventory such as fresh fish. Since the August 2007 merger, Sunflower Farmers Market opened in Boulder, Sprouts is on the way, the Boulder Coop has been put out of its misery, Whole Foods on Pearl is expanding into the bookstore next door and Vitamin Cottage is rebranded as Natural Grocers. Local Safeways and King Soopers have remodeled and expanded their natural and organic options. A freight train could not have stopped this, let alone the FTC.

Whole Foods, which has a coy and mistrustful relationship with the business press (they don’t talk to trade press, period), managed the news very shrewdly. The FTC release dropped on the first day of  Natural Products Expo West in Anaheim, Calif., guaranteeing minimal, distracted coverage.

Even the Wall Street Journal got it wrong, saying the FTC was forcing Whole Foods to disgorge “most” of the Wild Oats stores it acquired for $565 million in 2007. At that time, Oats operated 110 stores. With this week’s moves, which involve 32 stores, 42 former Oats locations will be left. John Mackey told analysts in December he regretted the acquisition, which saddled Whole Foods with enormous debt right before the market tanked. But in 2007, it looked like the perfect play, swatting away the competition that Mackey often derided under an assumed name on the Yahoo Finance boards.

Date our cynicism to August 2007. A few days after the merger closed, Whole Foods put out a press release focused on Boulder: “Wild Oats Markets’ Hometown Embraced in Whole Foods Market Future Plans.”

By acquiring Wild Oats, Whole Foods controlled six stores in Boulder alone. Industry watchers expected Whole Foods to treat the Wild Oats deal the way it usually absorbed regional chains: close outdated and duplicative stores, replace the survivors’ identity with Whole Foods branding and integrate them into its regional buying organization as quickly as possible.

Instead, Whole Foods pretended that the vastly overbuilt Boulder natural foods landscape would be treated with “respect and reverence.”

While it claimed to revere a couple of 20-year-old grocery stores, the Austin chain buried the biggest news in the next-to-last paragraph: that it wouldn’t open the flagship Wild Oats at 29th Street, a major blow to the redevelopment project where 300 Wild Oats headquarters employees had recently moved. The retail space and half the office space are still vacant.

Instead, Whole Foods promised , 68-year-old Ideal Market in North Boulder would be updated. Wild Oats at Baseline and Broadway would test a new “Market Express”  concept. Most ludicrous, the chain announced it would change Broadway and Arapahoe back to Alfalfa’s Market, “a tribute to a retailer Whole Foods Market believes was one of the early pioneers of natural grocery.”

We now know almost everything in that release was made up, except the closure at 29th Street and a makeover for Ideal Market. The old Alfalfa’s name never came back, the “Market Express” concept never happened, and now Whole Foods gets to close stores it wanted to close two years ago – in the name of fostering competition.

And the FTC still doesn’t get it. According to Health Urie and Alicia Wallace at the Daily Camera, FTC attorney Albert Kim expects the old Wild Oats will encourage new players in natural products. “‘If you look at the decision and order, it says the properties must sell for not less than $0,’ Kim said. ‘It’s a good bargain for somebody who’s looking for a springboard.’ ”

Alfalfa’s lives, but only as a Leftover Salmon song.

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