Whole Foods should acquire Abe’s Market (before Sprouts does)

WFM has been growing nicely, crushing the market, and tripling in value in just three years. But it appears that this isn’t particularly, or only, on account of great management. The natural, healthy and organic foods market has been growing dramatically, though it’s still a tiny portion of grocery shopping. The Hain Celestial Group (NASDAQ:HAIN), which brands, markets, and distributes these food markets has actually outgrown WFM in recent years. Analysts think the organic food market is growing at about 13% p.a.

Whole Foods is in the amazing industry, but isn’t crushing rivals

In fact, Sprout’s revenue growth is >> Whole Food’s revenue growth

Same store sales growth YOY: Sprouts 8.5%-9% WFM : 7.2%-7.5%

• Shopping at Whole Foods is a treat, but many people are short on time to visit a store, or short on time for shopping but happy to pickup their shopping.• Online shopping introduces its own logistics complexities, but also makes it possible for WFM to address the many millions of Americans (and Brits) who are not nearby a WFM store.• WFM can emulate the models built by Tesco (UK). Tesco does £3B in online sales, has 120k multi-channel customers. See: www.tescoplc.com/index.asp?pageid=540#/.That’s almost 10% of Tesco’s sales.•Tesco’s Click-and-Connect is a good example of a good combination for online and brick-and-mortar shopping.• Acquiring Abe’s is the quickest way for WFM to get online successfully. See here.

This isn’t Webvan… Tesco has made online a very succesfull strategy