John Mackey: A Leader in the Health Food Industry

John Mackey and Renee Lawson Hardy the co-founders of the current Whole Foods Market simply wanted to provide quality health food to the American consumer. This was over three decades ago when the first store opened. According to Mackey, helping people eat better is his priority. The opening of the first full-size natural health food store is what distinguished Mackey and Lawson from their competitors and was a huge success. The result is the Whole Foods Market (WFM) which is not only a household name but is recognized as a leader in providing healthier choices for today’s families.

Mackey and Lawson, a young couple, twenty-five and nineteen, borrowed forty-five thousand dollars from their friends and family to open the grocery store Safer Way. This name sounds familiar because it is a play on the name of the major grocery store retailer at the time Safeway Foods. Mackey and Lawson's food alternative retail location was a vegetarian store and their suppliers were local farmers (Collins, 2013). With no money for living expenses, Mackey and Lawson lived on the third level of their commercially zoned grocery store, a converted three-story house. The couple met when they were part of a grocery co-op. Mackey feels if he had not been a part of this co-op and introduced to healthier eating, which also influenced him to become a vegetarian, that WFM might not have happened (Collins, 2013). Two years after Safer Way opened their doors, Mackey and Lawson merged their store with another similar food-conscious store, Clarksville Natural Grocery, with its owners Craig Weller and Mark Skiles. This partnership resulted in the opening of the first Whole Foods Market on September 20, 1980 (Whole Foods Market History, 2014). This foursome invested in a market that some thought would not survive because of the eclectic food types, catering to upper-income individuals, and the higher food prices. However, history proved differently.

Mackey’s first Whole Foods Market’s retail location was in Austin, Texas. Today there are 342 stores in the United States, Canada, and the United Kingdom. The growth of this health-conscious conglomerate happened over the years by Mackey’s strategic acquisitions of profitable independent stores throughout the United States. Mackey’s idealism and respect are exhibited in his openness about the contributions of these retailers to the success of WFM, as the website provides an in-depth summary of each acquisition and its contribution to promoting healthier food choices (Whole Foods Market History, 2014). After four years in Austin, Texas, Mackey branched out into the city of Houston when he purchased the Whole Foods Company, and shortly after, on the west coast, a new store was built in Palo Alto, California. Subsequently, Mackey began aggressive acquisitions over the next few years, which help to accelerate the growth rate of WFM in other geographical locations. In 2002, Mackey opened WFM in Canada and, in 2004, through the acquisition of the United Kingdom’s grocery chain Fresh & Wild, it opened seven stores. Holistic eating is a worldwide affair that Mackey is taking advantage of.

Mackey the Healthy Capitalist

Mackey describes himself as a capitalist that cares. He believes in the capitalist system; however, he feels that making money is, most often, not the first reason that entrepreneurs start new businesses (Collins, 2013). His reason for opening his first vegetarian retail location was to provide healthier food options for people. As he learned firsthand about healthier food and became a vegetarian himself, his passion fed his commercial success. Mackey, a billionaire, built his empire on the ethics of quality. This objective to promote excellence with non-conformity is the cornerstone of his success. A small vegetarian grocery store opening in 1978 has grown into the conglomerate seen today. Initially, Mackey’s customer base complained that his prices were too high, even today some jokingly refer to WFM as Whole Paycheck because of their high prices (Collins, 2013). But Mackey’s focus was a niche customer base and included people with similar health ideologies who were willing to pay extra to eat well.

WFM endorses healthy food, period. Their website not only promotes their brand, but it also encourages the benefits of eating healthy. WFM has positioned itself as the guru on health-conscious eating and this makes its customers feel secure about shopping there and paying higher prices. In this, Mackey has done a great job of promoting the WFM brand.

Another reason for Mackey’s success is how WFM treats their employees. Employees are an important asset to WFM and the investment the Mackey makes in them is obvious. In 2013 their average hourly wage was $19.00 and their average salary just under $40,000 (Peterson, 2014). Employee retention at WFM is significantly higher when compared to other retail stores. Employees encourage the diverse atmosphere as they happily engage with the customers, taking ownership of their contribution to each store.

Walter Robb, who shares the role of chief executive officer with Mackey, also embraces the same ideas that their employees bring significant value to the table. He considers that this is one of the secrets of their success. Creativity and flexibility are stressed to their seventy-eight thousand employees (Colvin, 2013). This openness to employee initiatives and ideas fosters a competitive work environment that is not just about a paycheck. These Co-CEOs do not speak in terms of idealism, but realism, as the top management can earn no more than nineteen times the average annual salary of their employees. This is a significant departure from what other CEOs and CFOs are paid, which tops more than 500 times the average salary of their workers (Collins, 2013). WFM has honed in on the fact that achieving high levels of work quality not only begins with salaries, but its longevity is steeped in how people are treated and appreciated. Team building, Robb believes, directly impacts employee satisfaction (Colvin, 2013). Everyone belongs to a specific team, even CEOs Robb and Mackey. This fosters the concept of building trust in a team and the positive notion of teamwork. Empowering people is an important focus of Mackey’s business philosophy he understands they are the front line of contact for his WFM customers.

While WFM is positioned as one big, happy family, some see problems in their infrastructure. For example, Mackey is anti-union and this is rather contradictory to his open culture. He is on record as saying that “The union is like having herpes. It doesn’t kill you, but it’s unpleasant and inconvenient, and it stops a lot of people from becoming your lover” (Paumgarten, 2010). Mackey is known as a right-wing conservative who is in direct contrast to the free-spirited culture present in his WFM stores. Therefore, seemingly, his ultimate goal, as with most capitalists, is to make a profit, which may compromise his idealism.

The final analysis is that the WFM story is a good one. The company will celebrate its thirty-fifth year in business next year. Mackey is an agent of change and redirection when needed. The essence of why WFM started as an entity remains today in the philosophy of the company: to give consumers healthier food choices.

References

Collins, B. (2013, May 29). John Mackey, Whole Foods: Ethical appetite. Retrieved from http://www.billionaire.com/wisdom/417/john-mackey-whole-foods-ethical-appetite

Colvin, G. (2013, May 20). Walter Robb: Whole Foods' other CEO on organic growth. Fortune Magazine. Retrieved from http://money.cnn.com/2013/05/06/leadership/whole-foods-robb-ceo.pr.fortune/

Paumgarten, N. (2010, January 4). Food Fighter: Does Whole Foods’ C.E.O. know what’s best for you? The New Yorker. Retrieved from http://www.newyorker.com/reporting/2010/01/04/100104fa_fact_paumgarten

Whole Foods market history. (2014). Retrieved from http://www.wholefoodsmarket.com/company-info/whole-foods-market-history#wholefoodsmarket