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The Whole Foods Effect

Whole Foods is coming? Time to buy

May 5, 2012

By Will Doig

Read More: http://www.salon.com/2012/05/05/whol...buy/singleton/

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If you ask Whole Foods why it’s breaking ground on a store in Midtown Detroit this month, it’ll say it wants to be part of “an incredible community” and “make natural foods available to everyone.” And that may be. But it’s also true that the Austin, Texas-based retailer has made a science of putting down roots in urban locations at what often seems to be just the right moment. In Washington, D.C., near Logan Circle in 2000, Uptown New Orleans and the East Liberty section of Pittsburgh in 2002, Boston’s “Latin Quarter” in Jamaica Plain in 2011 — areas that other specialty grocers might have considered unworthy of goat cheese and ostrich eggs, but that were actually on the verge of a boom that, lo and behold, kicked into high gear as soon as Whole Foods moved in.

- The company is so good at the real-estate game that it has spawned a catchphrase, the Whole Foods Effect, a phenomenon Detroit is clearly banking on, having offered the retailer $4.2 million to come there. That figure suggests city leaders believe that Whole Foods is a force unto itself that can give a neighborhood the escape velocity it needs to break free of its doldrums. Are they right? Whether the Whole Foods Effect is real, or the company is just extremely good at slipping into areas that would have gone upscale anyway, has never been directly quantified. But evidence suggests that Whole Foods can accelerate gentrification in particular ways. A new Whole Foods may not cause property values to shoot up on its own, but it can set into motion a series of events that change neighborhoods.

- Take Gowanus, a windswept, post-industrial section of Brooklyn, N.Y., that’s home to a few bars and art spaces but is essentially a no man’s land sandwiched between the tonier neighborhoods of Park Slope and Carroll Gardens. Though Whole Foods announced in February it would open a 56,000-square-foot store there, Jim Cornell, senior vice president at Corcoran Group Real Estate, said prices in the neighborhood didn’t budge. “What [the announcement] did do, however, is give Gowanus, which already has a burgeoning arts and entertainment scene, additional credibility as a place to live,” he says. Fully half of his potential buyers have asked about the Whole Foods.

- This “seal of approval” quality is Whole Foods’ Midas touch; as with streetcar tracks, potential gentrifiers see it as something tangible that certifies a neighborhood as a quality buy. And not just residents; businesses, too, look to Whole Foods as a disciplined pioneer that does its homework. (The retailer is debt-free, growing steadily and has 50 new stores in the pipeline.) Sue Mosey, president of Detroit’s community development organization Midtown Inc. and a key player in bringing Whole Foods to Detroit, is hoping other businesses follow. “We definitely feel that just the signal that there’s a quality national operation moving in will interest other businesses,” she says.

- Its most basic criterion is reportedly 200,000 people, a good portion of them college educated, living within a 20-minute drive. Amanda Musilli, the company’s Detroit Community Liaison, demurs when asked to elaborate, saying only that Midtown is “a community that’s going through a transformation right now.” About that, she’s absolutely right. The average household income of new home buyers in Midtown Detroit is now nearly $113,788, the highest in the city. And the neighborhood is facing a housing shortage (a miracle in Detroit), thanks to financial incentives offered to residents who move there. There’s also the $33,000-a-year College for Creative Studies nearby, packed with free-range foodies. If Whole Foods can succeed anywhere in Detroit, it’s here.

- Once evening-oriented development starts attracting people from outside the neighborhood, the area acquires what realtors call the “dwell factor,” a fancy way of saying it gets used in multiple ways. When we talk about the value of mixed-use neighborhoods, we’re often thinking of physical attributes — housing, retail, parks — but you could just as easily think of “mixed-use” in terms of time: school and work during the day, shopping in the afternoon and evening, restaurants, bars and entertainment well into the night.

- Could a Safeway gentrify a neighborhood like Midtown Detroit? Could a Wal-Mart? Probably not in the same way. Not only do those brands not lure the high rollers that Whole Foods does, they don’t create an upscale version of what University of Chicago sociology professor Terry Nichols Clark calls the urban “scenescape,” the theory that public space is an idea as much as a physical place. Urban amenities have a multiplying effect on their immediate area — a Whole Foods is more likely to end up in a neighborhood with similar amenities, and vice versa.

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http://media.salon.com/2012/05/dream...t5-460x307.jpg

Say what you want about Whole Foods, but they truly do bring a different standard of food to the neighborhoods they enter.

I live in the Village in NYC and the only places I'll buy fruits and vegetables are the Union Square Greenmarket and Whole Foods. Other grocery stores in Manhattan (Gristedes, Food Emporium, etc.) have nothing worth eating.

It's also the only full-on grocery store (as opposed to specialty store) where you can find really good bread, meat and cheese (otherwise you need to go to a bakery, butcher or cheese shop like Murray's).

It's the upscale casual restaurant of the grocery world. Overpriced and not that good but safe and a lot better than the worst case.

When Whole Foods opens up in a neighbourhood with nothing but 7/11 it's a big deal. Around here there were already a number of very similar higher end grocery stores and many smaller specialized stores that are strictly better in some specific domain.

My partner refuses to go to Whole Foods because of cult health science stuff. Last time we went there was a sign above a pile of $27.99 (or whatever they were) glass water bottles proclaiming that they were "PBA-free". The store also tends to be full of haughty people and I can't help but believe that they are there to feel good about themselves for having paid $13 for an orange and a spelt cookie.

This is such a ridiculous article, excuse for me not reading the whole thing.

The article begins with an implication that Whole Foods' entrance into the Detroit market is a forecast for an up and coming neighborhood. Okay, sounds like Detroit is really gaining steam.

But, unlike many of Whole Food's other forays, their entrance into Detroit is backed by over $4 million in government subsidies.

If Whole Foods truly believed in Detroit - and the area was truly becoming fertile territory, Whole Foods would already be there without the need for a subsidy.

Whole Foods doesn't cause gentrification. It seems that it just has a "riskier" expansion MO than the typical corporation (who never ever invest in up and coming areas). But does that part of Detroit meet Whole Food's criterion described above? Or did the company brush those standards aside in the face of $4m in public funding?

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Originally Posted by 10023 (Post 5692806)

Say what you want about Whole Foods, but they truly do bring a different standard of food to the neighborhoods they enter.

Yup, and they undoubtedly serve as anchors for redevelopment of the neighborhoods they enter.

The store in Pittsburgh in the East Liberty neighborhood brought people into the neighborhood from the nearby wealthier areas. It is a prime example of the "if you build it, they will come" plan... especially when the surrounding neighborhoods are a perfect fit for the Whole Foods demographic. Since it was built, the area has become Pittsburgh's hotbed of urban redevelopment investment, when before it was a crumbling, forgotten area destroyed by "planning" blunders of the past.

The New Orleans Magazine St in Uptown location is a great store, as it formerly was a bus/streetcar maintenance barn and was kind of a dead zone in the neighborhood. Now, the stretch of Magazine has become much more vibrant and much improved.

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Grocery stores just have an incomparable value to any neighborhood, since they provide the necessities that you have to keep coming back for. Make that store really nice, a la Whole Foods, and people are going to come back more and more often -- coming into a neighborhood that may not have had as much positive activity. Next thing you know, a bank branch opens, a hair salon, a bakery, a bike shop, restaurants, bars, etc. to satisfy new demand and take advantage of that activity. And usually, those new businesses are also geared to that same Whole Foods demographic.

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Originally Posted by McBane (Post 5692923)

Whole Foods doesn't cause gentrification. It seems that it just has a "riskier" expansion MO than the typical corporation (who never ever invest in up and coming areas).

Maybe it is not THE cause for it, but grocery stores have much more power in redevelopment efforts than just about anything else. People NEED to go to them on a daily basis -- they provide a CONSTANT flow of commercial to an area. No other type of development can really claim this. You provide a consistent flow of consumer traffic, you're gonna get other businesses looking to take advantage of that traffic.

Blighted, urban neighborhoods across the nation are always calling out for a neighborhood grocery store. And anytime residential development is contemplated in city cores, grocery store options are huge players in decisions to proceed with a project and figure prominently in potential residents' choices to live in an area or not. This situation is further illustrated plainly when residential developments are constructed with supermarkets as anchors to the entire development.

It's suggested as being a catalyst for improvements around the neighbourhood and to also draw more outsiders in to shop there unlike other chain stores that aren't too special and that you can find anywhere.

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Originally Posted by someone123 (Post 5692905)

When Whole Foods opens up in a neighbourhood with nothing but 7/11 it's a big deal. Around here there were already a number of very similar higher end grocery stores and many smaller specialized stores that are strictly better in some specific domain.

What's your definition of a "similar higher end grocery store"?

In Manhattan the only one that I can think of is Citarella, which has 3 locations but they're tiny. It's really more of a specialty store than a grocery store. There's also a place near me called Gourmet Garage, but their produce and other fresh foods aren't of the same caliber as Whole Foods either. I go to Murray's for a lot of things (cheese, butter, cured meats, various snacks), but they don't sell produce, fresh meat or fish or even full-size milk.

Again, it's the only place in the lower half of Manhattan other than the Greenmarket that sells produce worth a damn, and for that alone it's invaluable. It's also cheaper than Food Emporium despite the higher quality food.

Is Fairway considered higher-end?

Whole foods has had a hard time in the Minneapolis market because the city is already saturated with co-ops and has two high end local grocery store chains. They don't offer anything that can't be gotten elsewhere. Their only store in the city is in a strip mall in a not very urban area, so no Whole Foods effect here.

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Originally Posted by tdawg (Post 5693157)

Is Fairway considered higher-end?

I know it's considered a good value, but yes it's got pretty good produce. I haven't been in a while to say how I'd think of it otherwise. It's also more than 70 blocks north of me, so not an option for anything.

I think part of the reason Whole Foods is so great in New York is that the city doesn't really have a great local alternative. In Chicago you've got Dominick's and Jewel, the nicer locations of which are not bad; on the West Coast you've got Safeway. In Manhattan you've mostly got places like Food Emporium and Gristedes, which are complete crap.

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Originally Posted by 10023 (Post 5693194)

There is no D'Agostino's downtown? I know there is a Westside Market in Chelsea.

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Originally Posted by McBane (Post 5692923)

I'm pretty sure that the Whole Foods in Foggy Bottom, D.C. got a tax subsidy. I believe the new Gowanus, Brooklyn Whole Foods that is opening soon also used brownfield tax credits. So this isn't unique for Detroit.

Too bad the Whole Foods store design coming to Detroit is possibly the worst looking in their chain. The above examples look contextual and welcoming from street level. The one in Detroit will turn away from the street and feature a generous surface parking lot out front, despite that there is a garage next door.

The Ellington and Orchestra place projects were integral components to making that area feel urban once again, and this just throws it into reverse.

Don't get me wrong, I'm thrilled whole foods is coming. But as of late, recent proposals have been outright terrible in the architecture category. I personally believe good design is part of the equation to building stronger neighborhoods. I'm tired of Detroit getting the lowest common denominator in development.

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Originally Posted by 10023 (Post 5693007)

In Toronto, Pusateri's is much higher quality than Whole Foods. And one of their locations is only a short walk from a Whole Foods.

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Originally Posted by 10023 (Post 5693194)

I think part of the reason Whole Foods is so great in New York is that the city doesn't really have a great local alternative. In Chicago you've got Dominick's and Jewel, the nicer locations of which are not bad; on the West Coast you've got Safeway. In Manhattan you've mostly got places like Food Emporium and Gristedes, which are complete crap.

What about D'Agostino? Not the greatest supermarket, but it seemed to be much better than Food Emporium or Gristedes. I thought there was one in the Village, but I'm not sure.

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Originally Posted by Private Dick (Post 5693283)

What about D'Agostino? Not the greatest supermarket, but it seemed to be much better than Food Emporium or Gristedes. I thought there was one in the Village, but I'm not sure.

Yeah there's a D'Ag over on Greenwich St (far west). Not bad but still too much major brand processed stuff for my liking.

Don't get my wrong, I'll stop there (or Citarella on 6th Ave, or Gourmet Garage on 7th) if I'm on my way home and need to pick up milk or eggs or cereal. But if I'm actually grocery shopping because I'm cooking dinner, I'll go to Whole Foods.

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Originally Posted by 10023 (Post 5693301)

Yeah there's a D'Ag over on Greenwich St (far west). Not bad but still too much major brand processed stuff for my liking.

Yeah, you're right. I wonder if the wonderful Wegmans will ever make an entry into NYC, since they are a NY-based company and are in NY, PA, NJ.

they are opening a new whole foods in a new tower development in a suburb, definately brings some cache with it knowing that whole foods will be in the area

back in the 90's wasn't there that things referred to as the starbucks effect? when it opened in your hood you knew your area "had arrived"

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Originally Posted by 10023 (Post 5693007)

I'm talking about a place that at least has produce, meat, dairy, and baked goods. There are a bunch of single stores or small chains in Vancouver (Meinhardt, Stong's, Choices) and then there's Capers (which I think was either bought by Whole Foods or was always Whole Foods) and Urban Fare. There might be others.

In Halifax there's a local chain called Pete's which as far as I can tell occupies exactly the same niche as Whole Foods. Maybe these chains are less common in the US because Whole Foods expanded earlier and more aggressively there.

Does Brooklyn have a better variety of grocery stores? It is more comparable to the sorts of neighbourhoods that have these other places. I've always figured everybody in Manhattan just eats out all the time.