Whole Foods needs more nimble suppliers

Jana stake reveals something about relationship with United Natural Foods

Yesterday during the trading day Whole Foods stock spiked 10% on news that an activist Hedge Fund bought a stake in the company. As a consequence of that news the shares of United Natural Foods (UNFI) dropped by around 10%. This is a clear sign that the market thinks Whole Foods needs to change something about its relationship with UNFI.

Whole Foods has not hidden the nature of the relationship. Founder John Mackey often talks about the consideration of all stakeholders. He even mentioned at various talks that Whole Foods might be able to squeeze more out of UNFI since they are by far the largest customer. But Mackey doesn’t want to do business like this.

Instead, Mackey wants all stakeholders to grow with Whole Foods. In fact, Whole Foods has helped many more companies to prosper. Probably 20% of the aisles in Whole Foods consist of products from companies that would not exist if it weren’t for Whole Foods. Even in movies you can often hear the phrase by an aspiring entrepreneur “my products were picked up by Whole Foods”, which is code for “I made it”.

Now, with Jana coming in, a shakeup is expected. The market thinks that Whole Foods will have to go tougher on UNFI.

Is that a good thing?

The short answer is, yes.

Whole Foods is struggling with traffic and comp sales. This is wartime for Whole Foods. John Mackey was recently reinstated as sole CEO. Mackey is a wartime CEO, while former co-CEO Walter Robb was a peacetime CEO.

Now, all suppliers have to shift to war.

When Mackey says all stakeholders should be considered he probably meant in good times, i.e. when you make money, share it with others.

But it also means that all stakeholders need to be ready to fight in bad times. Innovate, lower cost, attract customers, fight online culture and fight grocery competition. Those are the directives and Whole Foods needs to be clear about those not just internally but also to all it’s stakeholders.

Jana might help in formulating this attitude.

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