Whole Foods sets sights on growth in Canada

Organic sector expands

MONTREAL - John Mackey, the Texan founder and chief executive of the world's biggest natural foods retailer, is speeding up his expansion into Canada.

His 24-year-old Whole Foods Market, Inc., heading for fiscal 2004 sales of US$4-billion from 155 high-end stores, moved quietly into Canada in 2002 with a 40,000-square-foot unit in Toronto's upscale Yorkville area. It was Mr. Mackey's first foray outside the United States and he soon found Canadian tastes are different.

Mr. Mackey, 50, is determined to make grocery shopping fun. He envisions clusters of his natural and organic food stores in upscale areas of Greater Vancouver as well Metropolitan Toronto.

He is ramping up the Canadian expansion by opening a 37,000-square-foot store in the West Vancouver Mall this Fall and negotiating for more sites to make a cluster of four or five stores.

"We investigate the demographics carefully and target markets where people are well educated and demand choice and will pay more for our authentic fish, meats, fruits and vegetables," said Jim Sud, Whole Foods executive vice-president of growth and business development. "Vancouver fits the bill ... it's a sophisticated food town with a strong appreciation of quality."

The Toronto area has the most potential and Whole Foods has several more sites lined up, planning stores with 40,000 to 50,000 square feet of selling space, he said. It will open a 42,500-square-foot unit in Oakville in mid-2005.

He is also looking at Calgary, but Edmonton, Halifax and Ottawa are not yet in his sights. Montreal is challenging because of the language difference and provincial labour laws.

Mr. Mackey, who practices yoga and is a vegetarian, is pro-capitalism while limiting executive salaries to 14 times the average employee's pay.

Whole Foods does not reveal the investment needed for a new store -- it recently opened a 59,000-square-foot unit in Manhattan and is building a 80,000-square-foot unit at its new headquarters in Austin,Tex. Almost all its locations are leased.

"Whole Foods has been the darling of the American retailing industry, drawing gushing tributes from analysts," said Toronto marketing consultant Len Kubas. "It can boast that US$10,000 invested in the company when it went public in 1992 is now worth almost US$200,000."

But Whole Foods needs more locations in Canada to capitalize on its growth formula, he said, and forming clusters of three or four stores in the main cities is essential to minimize supply problems.

Whole Foods is leading a revolution sweeping North American retailing, but also faces competition from specialty retailers and big chains such as Loblaw Cos.