My supervisor had warned me and I hadn’t listened. “Don’t challenge John, he will bite your head off.” I was a young grocery buyer, just starting on the national merchandising team. I had been with the company 6 years, bouncing up and around from stock clerk through 4 stores and 3 regions into a high pressure job in Austin. We had just gotten out of a full team meeting after a tough quarter during the great recession in 2009 or so. Our CEO, John Mackey, addressed a couple hundred of us directly about the state of the company, which at the time was decentralized into 12 operating regions in the U.S.
John Mackey, or as some of us called him, “The MacDaddy”, liked to tell stories during meetings, evangelizing his vision, but occasionally veering off into whatever was on his mind. It was usually pretty entertaining and even occasionally informative. I decided to raise my hand and ask a question, something along the lines of why the communication was so poor between our stores, regional offices and the national teams. I gave a few examples. As I was warned, he did not take it well. His response was along the lines of, “how dare you suggest that, what is wrong with you, you are absolutely incorrect, etc.”, in front of a couple of my hundred peers. So. Awkward.
But CEO’s have to be good storytellers. Like Bible Belt fire and brimstone preachers, CEO’s know that nothing binds the flock better than a good yarn. John Mackey’s vision, through his gift for storytelling, enabled Whole Foods to change the way America eats, buys and thinks about foods. But not all good stories have happy endings.
According to The Whole Story: Adventures in Life, Love and Capitalism, Whole Foods was founded in 1980 as Saferway. The moniker was a glib jab at the mainstream grocer now owned by Albertsons. An infusion of his father’s money, support from buddies in the oil and gas industry (this is Texas after all) and an eventual merger with another local grocer kickstarted the Whole Foods legacy. The company attracted an eclectic and colorful workforce, an atypical ensemble of artists, veterans, musicians, scientists, graduate students and college dropouts who collectively made the company the most compelling retail success story of the late 20th and early 21st century. Mackey places himself at the center of the story, (“it’s really my story”) as a leader, observer, and active participant in the company’s rapid growth, evolution and eventual acquisition by Amazon.
The Whole Story is history from above. It is about the kings and queens (mostly kings), their retail conquests, alliances, quarrels and fiefdoms, sans dragonfire. These include several generations of his proteges and collaborators, their successes and triumphs, such as the opening of the Columbus Circle Store. The Whole Story is the story of Strider, Mackey’s trail name, the secret king as he triumphantly strode up the Appalachian trail while trusting thousands of Whole Foods team members to mind the stores. It is also the story of “Rahodeb”, a CEO who couldn’t stop trolling stock trading message boards late at night.
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The reader should be advised then, that there are few cashiers, clerks or janitors in this story, ostensibly about a chain of grocery stores. As the company scales and industrializes, the store-level staff disappears into abstracted “team members”.
There is the expected anti-union bluster, out of touch with nearly 80% of Americans, but feeding the cognitive biases of the core audience for the book: hungry, incipient CEOs, their proteges and accomplices. One anecdote recounts a time at the Madison, Wisconsin store when a local college professor challenged his students to unionize Whole Foods. The union campaign was immature, awkward and ultimately doomed. Mackey learned quickly, touring the company, realizing his employees needed better pay and benefits. And he delivered. But would he have been thus enlightened without the union drive? There was this velvet glove idealism, all “can work together as partners, fellow stakeholders, with openness, trust, community, shared purpose, joy and love” that hid a razor sharp focus on expense management. Union free, during the Fresh Fields acquisition, the “first order of business was to cut their bloated support staff”.
The Whole Story reveals the secret sauce to the Whole Foods success. “We were more ambitious and thought strategically about the long term”. Yet also cuddly, paternalistic and spiritual. Pathologically competitive, acquisitive and expansionist. Salary caps for executives plus broad, store team level “gainsharing” that shared productivity gains with employees. And among the most equitable distributions of stock options for non-executives. Keeping morale and employee retention high and turnover low, or getting “Whole Foods fired”: being transferred to a less important job. Attracting generations of talent, who brought along their friends and families, creating networks of patronage that spread the vibrant retail culture from city to city and state to state. That it was better to apologize than ask for permission. That for thousands of employees, it was more than a job. It became a shared mission of selling the best food and changing how their world eats, a place where they fell in love, made friends for life, moved up into the middle class. Outwardly antagonistic to “anti-capitalists” and “left wing intellectuals” yet learning from their criticisms and unafraid to experiment, revolutionary in the most classically capitalist sense. Retail after all, means to “re-tailor”, from the French, always evolving, adapting. Capitalism, conscious.
Mackey was the CEO and capitalist who truly loved the game of capitalism, but not all the players. His justifiable, relatable, palpable disgust at the VC’s, activist investors, board members, retail competitors, and professional MBA’s trying to tell him what to do, trying to steal his company, ruin his vision and legacy.
The Whole Story is a tale of a brilliant retailer, who “wanted people to innovate, take risks, create great stores, manage them locally and surprise and inspire us all with their success”. A storyteller who inspired thousands of grocery workers to feed the world good food. Until the layoffs and restructuring.
That, then, is a story of how retail is just math, and you can ignore this math at your peril. The weighted average gross margins of millions of products, blended by department, dependent on their labor needs and supplier costs. Supermarkets have big center stores because big center stores are the key to supermarkets. The Whole Foods model gloriously disrupted this, with large, gorgeous perishable sections that meant higher shrink, and fresh prepared delis and full service meat cases that meant higher labor. “Whole Paycheck” was selling great food with stellar service at absurd prices, making organic mainstream, bringing thousands of innovative new brands to market, riding the consumer demand wave through multiple recessions until it all crashed on the rocks of competition and margin compression, by trying to match Kroger, Walmart and HEB on pricing while imitating the Trader Joe’s store brands tsunami. As Snoop Dogg would say, “the math ain’t mathin’”. After 20 years of being a “best place to work”, the retail math made layoffs, restructuring and centralization inevitable. Just as Amazon math later ensured lower prices and higher fees for suppliers, but greater bureaucratization and higher G&A (way more “bloated” than Fresh Fields), more expendibility and store level employee turnover, plus a permanent shift to professional managerialism and a loss of innovation and ingenuity at the store level. But at least, all still union free.
It is a story of how conscious capitalism, conceived by a free-spirited libertarian Texan, gave rise to the globalist, G7 stakeholder capitalism now derided as “wokeness”. This is a bait and switch almost as cute as when Romneycare was rebranded and expanded as Obamacare. And speaking of, there is the story of THAT WSJ op-ed, the one with the Margaret Thatcher quote, parroting Phyllis Schlafly and Heritage Foundation talking points against socialized medicine, 40 million or so uninsured Americans notwithstanding.
Then, there is the sad story of his final days at Whole Foods, getting verbally decapitated by his boss, his new boss, an Amazon bigwig. A CEO who never had a boss before, this vegan alpha who never lost a challenge to his dominance, being told to expletively “just do what you are told” after questioning the received wisdom on remote work for white collar staff (Mackey thought it was a double standard relative to store employees). It would be funny if it didn’t presage the tragic death of the libertine, restless, crunchy, cosmic cowboy grocery culture dreamt up on long distance hikes, aided by LSD, MDMA and psilocybin under the warm Texas sun. Getting paid to sell good food while having fun doing it. Not Strider-as-Aragorn ascending the throne at Minas Tirith, but Gollum dancing maniacally, holding on to the One Ring as he is swallowed by the fires of Amazon’s Mount Doom. A story for the ages.
