Analysis: Loss of Whole Foods a Blow, but Does It Indicate a Broader Problem?

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On Tuesday evening, the City’s Chief Innovation Officer, Diane Parro, presented to the council the results of a survey about the health of the Davis Downtown.   As the Vanguard had previously reported, while the downtown scored well in the survey in terms of being attractive and safe, the majority of people did not agree that downtown fulfills basic shopping and entertainment needs.

Among the chief concerns as surveyed by the public were the lack of parking and empty store fronts.

As if on cue, on Wednesday, Whole Foods announced that it would be leaving Davis.

“As we work to position Whole Foods Market for long-term success, we have carefully evaluated our portfolio of stores to align with a more thoughtful growth strategy,” corporate spokesperson Betsy Harden said in a statement. “As a result, we have decided to close the Davis store.”

She added, “This was not a decision that was made lightly and we are working closely with all affected team members to find alternative positions at nearby stores where possible.”

The store could close as soon as Sunday.  This caught a number of people by surprise.  Some have attributed the problem to insufficient traffic and sales.  And some see it as a broader problem than just one store.

Then again, as yesterday’s article in the Washington Post attests, Whole Foods is now struggling as a whole, even though “[o]rganic food has never been so popular among American consumers.”

The Post reports that on Wednesday the company “reported what is arguably its worst performance in a decade, announcing its sixth consecutive quarter of falling same-store sales and cutting its outlook for the year.”  Just 16 months ago, “Whole Foods predicted it would grow its 470 U.S. locations to more than 1,200.”

The company announced it is closing nine stores – the most it has ever closed at one time.  But that doesn’t explain why they would close in Davis, a community that would seem to fit closely with the organic foods company.

But, digging down into the specifics, the problem seems to be that organics has gone from a fringe interest to thoroughly mainstream.  Whole Foods in Davis always had to compete with the more established and less commercialized Davis Food Co-Op and perhaps was never really able to make inroads, despite the Food Co-Op having its own problems during that time.

Dianne Parro noted that the city has a lot of grocery opportunity and therefore believes “it’s probably exceptionally hard to be a grocer when there’s a lot of competition.”  She wants to get more information as to why Davis was one of nine stores targeted for closure.

The question Davis will have to ponder in light of store front vacancies and a seeming lack of shopping and entertainment options for many community members is whether the Davis Downtown is struggling.

We got a mixture of responses off the record.  There is one belief that we are seeing only local people interested in shopping in locally-owned stores, which has led to declining sales over times.  These problems are exacerbated by the lack of parking and the view that Davis has become anti-car.

On the other hand, some argue that Davis Downtown is fine –  that the lack of parking indicates a vitality and that the vacant storefront problem is an isolated condition, associated with a single commercial property owner which will resolve itself over time.

Of course it seems possible, even likely, that both views have merit.  For the city’s Chief Innovation Officer Diane Parro, the timing could not be better to take a look at the city’s core area plan.

“I think the exciting opportunity to address all of this and more is going to be with the outreach opportunities of the Core Area Specific Plan,” she told the Vanguard.  “That could not be coming at a better time, frankly.”

This is being undertaken as the highest priority for the city in the General Plan update.  That shows a clear focus by the city and city council for the downtown.  Ms. Parro argued that this wasn’t important just because of the turnover of the Brinley properties, but also the ongoing need to address parking.

About the things that people expressed concern about in the survey, Ms. Parro said, “We’re really concerned about most of that too.

“It’s not easy to run a business anywhere, but it’s very hard in Davis for reasons outside our control like people’s changing buying patterns to things that are happening just here like a Whole Foods closed,” she said, “that changes the marketplace.

“Now is the time that really examining what the whole community is interested, in downtown, is the best action we could be taking,” she said.  “Timing is perfect.”

Diane Parro said that the problems associated with the Brinley turnover were not really anticipated, but she added, “We’re still at the beginning of the story.  When we get to the middle or the end of the story, we all might look back and say that was great.  Boy it was hard to live through the first year, or two, but look at something happened.

“Yes, I totally acknowledge that we don’t like to see empty storefronts, we don’t like any of the things that go with that,” she said.  “But I do hope… that eventually we’ll look back and say something good came out of it.”

At the same time, she acknowledged, “I’m not at all sure that there’s an answer to the question of ‘what do we need to do.’”  She said it has to be much more of the community’s best thinking.  “It needs to start at the council level with embracing the whole community and thinking about what people want our downtown to be.”

She said that a large number of people have contacted her in the last day or so to opine as to what should now go into the spot vacated by Whole Foods.

But then part of the problem is that opinions vary on what people want to see in the downtown.  As Ms. Parro put it, “What I think is great and what you think is great are different.”

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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21 thoughts on “Analysis: Loss of Whole Foods a Blow, but Does It Indicate a Broader Problem?”

  1. Howard P

    I think the broader problem is Whole Foods business model… they have decided to close 9 stores (hint… may not have much to do with Davis)… I and my spouse ‘checked them out’ after they opened… we saw nothing that we could not get from the Food Co-op, Nugget, etc., at a much cheaper or equal cost.

  2. darelldd

    These problems are exacerbated by the lack of parking and the view that Davis has become anti-car.

    Hmm. These problems are exacerbated by…? Too presumptive for my taste. While the lack of store-front car parking is obviously annoying to some, there’s a compelling view that this problem is not due to a “lack of parking” in Davis. From an objective standpoint it appears that the only thing troubling drivers is… too many other drivers bringing their cars into town.

    If the time, money and effort that we spend on subsidizing downtown car parking (and the rest of the infrastructure) is an indication that Davis is “anti-car,” then Davis must have an abject hatred toward cyclists and pedestrians.

    The more people we can encourage to visit downtown without a car, the better things are for everybody – including those who need or choose to continue driving into town. Currently we are encouraging everybody to drive, and then wondering where to put all those pesky cars.

     

     

    1. Howard P

      Speaking from personal experience, those most interested in healthful and/or organic products are precisely those more inclined to shop via bike or ped means… I support your points…

    2. David Greenwald

      Fair enough Darrell, I was really trying to present contrary sides of the story with that point.  I tend to side with the multi-modal approach.  But if that’s the case, why did Whole Foods fail in Davis?

      That being said, the point that was made to me was that we needed to be able to attract not onl people from in town, but from the region to our downtown and the set up is not conducive to that. Or so it was expressed to me.

      1. darelldd

        Don and Howard covered some of the “why did Whole Foods fail” answers. Are there people who think that Whole Foods would have flourished had we just built them a $5 million parking structure in place of the horrible parking lot? Why did the other eight or nine Whole Foods fail? Dunno.

        I appreciate contrary sides of every story. (ain’t nobody more contrary than I!) Yet I have trouble with opinion that is stated as fact – “these problems ARE exacerbated by…”  I agree that they *could* be exacerbated by any number of things. But to presume that they’re exacerbated by a lack of parking (car parking is implied, but never stated… and maybe the problems are exacerbated by lack of bike parking!) is inappropriately begging the question.

        (And yes, I’m calling the kettle black, as I’m as guilty as anybody with the opinion as fact thing. Doesn’t stop me from pointing it out in articles though!)

        1. Howard P

          I certainly don’t think Whole Foods made their decision based on lack of parking… whatever mode of travel… I believe they misjudged the ‘market’ and the prices they charge… and they knew the parking situation, good/bad/indifferent before they moved in… will weep no tears… since most food products do not generate much in the way of sales tax (most items being exempt), am not too worried about effect on City revenues, either… property tax pretty much remains the same, whether occupied or not…

      2. Matt Williams

        Why did Whole Foods fail in Davis?

        Don’s “location, location, location” resonates for me.  Where it was/is located dictated that it qualifies as much more of a convenience store than a grocery store.  I suspect that if we had access to an average sale analysis of the Davis store to other Whole Foods stores in the region, we would find that the average sale in Davis was significantly lower than the average sale in other Whole Foods stores.  Anyone who has been to the Folsom Whole Foods has seen that a large proportion of the shoppers there are wheeling around shopping carts, filling them with the staples of their lives.  A similar walk through the Davis Whole Foods was almost completely devoid of people shopping for staples.  I suspect the average sale at either of the two Nugget Markets is noticeably larger than the average sale at Whole Foods Davis.  The same is probably true for the Co-op … larger average sale.  The average sale at Trader Joes is probably closest to Whole Foods, but because of location, the number of those sales is probably much greater at Trader Joes.

  3. Todd Edelman

    People all over the world in centers/downtowns of both small and large cities which are quieter, safer and better-smelling than Davis would find it amusing that downtown Davis is viewed by some as having not enough car parking or that car access is significantly limited. The city and citizen actors behind these child-friendly areas in other parts of the world realize that their savior is not free/validated/electronically-organized car parking but instead democratic and sustainable access by all means of mobility, but – to be clear – with cars parked at the actual periphery and – this is key – not able to go through the middle of these town centers at all, rather than just encouraged not to. In regards to the recent city council vote to increase the proportion of paid parking downtown, I’m happy that many here think that there should not be a free-for-all, but the planned provision of validated parking invalidates the idea that a downtown should be about social integration and joy as much as commerce. It’s not a shopping center; it’s the actual commons.

    Its soon former employees should be supported to the best of the City’s ability, but the closure of corporganic, owned-elsewhere, “Whole Paycheck” with a capital(ist) C “Commons” is a tremendous opportunity for taking action in many areas including the city council’s city-wide bicycle modal share goal for shopping, dining and entertainment of 25% for THIS year. (My non-scientific survey shows that at larger stores/shopping centers running the gamut from Nugget to Target to Grocery Outlet it’s 5% at best even on a sunny day — Davis Downtown has a higher share for sure, but not high enough to balance out those 80% below-goal low rates elsewhere.) More cycling makes everything quieter, walking safer… and when trips are shifted from car to bicycle it makes driving easier for trips when it’s actually needed.

    I think that the owners of many downtown businesses understand the proven general principle that people who arrive by bicycle end up spending more overall as they make more frequent trips (since they can’t fill a trunk or back seat with loot…) but also know that people prefer driving downtown in Davis despite its apparent challenges. Unfortunately it’s also the normal way for access for the bedroom-community mindset increasingly prevalent in town, especially in newer parts of its periphery.

    Davis has historical momentum and potential for a universal and holistic health plan for its downtown and the creatures that visit it, but this is obviously not helped by the lines of cars in this “capitol” of cycling, a central parking lot called a “plaza” and a commercial – and now at least temporarily failed – area referred to as “commons”. A truly thriving downtown is nourished by “whole” foods.

  4. Sharla C.

    The quality of the food was pretty good at Whole Foods, just so expensive.  I think it was the $17 lunch of soup & salad plus a drink that turned me away.  Cheaper to go to a downtown restaurant and actually be served for that price.  I found I could buy just about everything offered at Whole Foods at the Davis Food Co-op or Nugget.  Downtown needs a bodega type store and I think something like that would do well, but not in that location – tucked in somewhere in the core area.

    1. Dianne Shimmon Comini

      Alan Miller,that was a great store and I shopped there often. Sized for it’s LOCATION, locally owned and operated, but I guess the bank had the funds to take it–which I did not expect because the owners of the market owned the property.

  5. Anya McCann

    There are so many points I’d like to respond to…later.

    As for the loss. In short, it seems to me that the Davis WF was a marketing attempt to habituate future “regular” customers who have a disposable income (ie. college grads from UCD). It heavily weighs on the individual serving products. The store was never full by any stretch when I went there. People mostly congregated by the coffee bar (and we have plenty others in town happy to take their business).

    I disagree that you cannot shop competitively at WF. They work hard to have their store brand (365 Everyday Value) have very competitive prices. As a vegan, when I travel, WF is a reliable go-to to find any special products I want (organic grains, vegan “meat” and “cheese” substitutes, yogurt, hot food bar).

    However, the Co-op has worked very diligently over recent years to carry almost every single specialty product that used to draw me to periodically shop WF. There are at least 8 cases that are dedicated to those products and I spend a lot of money there.  The prices are similar, but I’d rather shop Coop for multiple reasons.

    One thing I loved at WF in Davis were the gorgeous vegan items displayed daily (reliably) in their bakery. I could always find a cake for a special event at the last minute, or order one in almost any flavor and they were top of the line in taste and beauty. The WF bakeries in Sacramento have only recently had those available (limited supply), so they were driving here. The Coop does not have a bakery, but (good news!) a larger kitchen/bakery is part of their 2 year plan, according to their GM. And they carry a nice selection of local vegan baked goods (Sugar Plum and others).

    By the way, Sharla, there are bodega type stores in downtown–check out Kim’s Asian market for some both regular and specialty vegetables at a bargain price. There are two other Asian product markets that have a variety of items, plus the Fast & Easy Mart. Anyone with a quick need can find something to make due. I don’t think a place stocked with a large variety of fresh veggies could survive.

    Students – I work with a lot of plant-based students (who need lots of fresh veggies, fruit and specialty products) and I can tell you that 95% of those I chat with about where they can buy food have never even heard of the Coop, do not know where it is, and are unfamiliar with the cooperative model–or the fact that they can volunteer or work there for lower priced food. The 5% that do know about it are either regulars or complain that it is far away.

    To that point: someone in a facebook discussion yesterday suggested that it could be required that landlords provide a couple of bike trailers that can be “checked out” – or having some communally owned at large apartment complexes. We could have a UCD or local run zip-car model for bike trailers. We also have zip cars and uber, which students could take to make a cheap communal trip to the market.

    The Coop would do well to market directly to crowds that roll through every 4 years – coupons, open houses for students, or perhaps a dorm delivery service.

    Whole Foods is my go-to when I don’t know the lay of the land in my travels. But anything else I want is at the Coop these days. Yeah Coop!!!!! (Thanks for listening to my requests and suggestions this year.)

    What should go in that space is for a time when I have more time…or perhaps an upcoming article.

    1. Alan Miller

      The COOP around a year ago was having problems keeping staple items I use in stock (such as any microgreens) and dropped several items I liked (such as watercress).  Unlike in the past, I was having trouble getting them to restock them or make special orders.  Though I didn’t want to, I started going to Whole Foods every 2nd or 3rd trip or making two stops.

      The good news is the COOP in the last six months seems to be getting it together, with a more attractive displays, microgreens now regularly in stock, and I even saw watercress on the shelves again recently.  This goes for other items as well.  I do believe the COOP is on a positive upward customer service trend, and just in time to catch a wave of new customers or return customers.

      I much agree the COOP needs to market better to the student transient population.

    2. Sharla C.

      A bodega would have more – batteries, toilet paper, women’s hygiene supplies, aspirin, first aid supplies, etc. – not just food.  Years ago, we had a full grocery store (State Market), plus two pharmacies (Quessenbury Drug and Star Pharmacy) downtown.  You now need to leave the downtown to purchase these essentials.  Maybe a large store is no longer desired, but we really need something.

  6. Roberta Millstein

    It seems unlikely to me that the problems that Whole Foods had were related to problems with filling downtown stores.  Downtown has been struggling to keep retail, issues that were not relevant to WF.  And as others have noted, there were plenty of other problems that were specific to Whole Foods: location, tough parking, prices (or perceived prices), competition, loyalty to local markets, etc.  Now there is an opportunity to bring some significant retail in that location, something better suited for that spot (*cough* Apple Store *cough*).

    I am hoping that we hear some out-of-the-box thinking from City staff about ways to incentivize retail downtown and how to retain retail downtown.  I don’t want to hear people throwing up their hands and saying, shopping patterns, Internet, oh my, what can we do?  Yes, what can we do?  Let’s brainstorm.

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