story by Kim Souza
Consumers and some farmers across Northwest Arkansas will have another grocery and distribution option as organic grocery chain Whole Foods plans to open a new store in Fayetteville in the fall of 2015.
Austin, Texas-based Whole Foods will anchor a new retail development of S.J. Collins at 3425 N. College Ave. in north Fayetteville. The grocer will occupy 35,500 square feet in the development. Another 26,670 square feet of other lease space is also available.
Whole Foods is known for using local farmers sourcing everything from meats, dairy and eggs, fruits and vegetables as well as breads and herbs. The grocer made its mark as a natural foods leader offering gluten-free, organic and non-GMO options long before traditional chains.
But times have changed and now many traditional grocers including discounter Wal-Mart Stores are invested in organic products. Wal-Mart’s April launch of Wild Oats organic products are now in about 2,000 stores.
“We have not released any metrics or sales information at this point,” Randy Hargrove, Wal-Mart corporate spokesman, said about Wild Oats’ sales.
Whole Foods said in July its comparable store sales increased just 3.9% in its most recent quarter. That's far below Whole Food's long-term target of 6% growth.
Wall Street analysts have said sagging sales at Whole Foods 388 stores across the U.S. and Canada are an indication that the one-time King of Kale is having a harder time fending off aggressive competition from Wal-Mart, Kroger and other regional and local grocers who have also expanded their healthier and organic food offerings.
With Wal-Mart blanketing the local region and much of the nation with more Neighborhood Market stores, Whole Foods will have plenty of competition in Northwest Arkansas.
Ozark Natural Foods in Fayetteville has practically owned the organic and buy local retail grocery business in Washington County. Fresh Market in Rogers is also a strong competitor. Harp’s has recently made a move toward a healthier-for-you meats program. Allen’s Food Store in Bella Vista expanded its gluten-free and organic food offerings two years ago, giving each category a section in the store.
Whole Foods plans to open a total of 38 new stores this year and will remodel stores that are 10 years old. It is also rolling out a national advertising campaign this fall and is experimenting with home delivery and online ordering.
Walter Robb, co-chief executive of Whole Foods, said the company is "seeing signs of stability in our sales trends and our strategic initiatives will help generate further momentum."
Analysts with Credit Suisse notes that the new initiatives and planned store openings could put pressure on profit margins going forward for Whole Foods.
"While Whole Foods is taking action to address sales weakness, we do not expect progress on these initiatives to meaningfully benefit comparable store sales in the near term," said Joe Agnese, an analyst at S&P Capital IQ.
Area farmers like the Boston Mountain Hog Breeders Association recently discussed opportunities the group could have selling their pork to Whole Foods.
Rose Konold, owner of Mason Creek Farm, recently met with Whole Foods, who toured her Fayetteville farm looking for potential pork suppliers this region, which will include the new store coming to Fayetteville, in Little Rock and soon-to-be two in Tulsa.
“By pooling our resources the farmers in this association will be able to supply enough meat all bearing the same quality label for larger retailers like Whole Foods,” Konold said.
Fran Free, founder of Oh Baby Foods, already has her product sold in hundreds of Whole Foods stores across the country. Free is excited that her all-natural baby food line and coming toddler foods will have another local outlet.