Blog: Dean BestWhole Foods' Mackey is no Ratner

Dean Best | 6 August 2009

I was only a wee nipper in the early 1990s but, as a business hack, the phrase 'doing a Ratner' is one I know well.

For those who don't, jewellery businessman Gerald Ratner came to the notice of the general public when, in 1991, he described his wares as “total crap", and boasted that some of its ear rings were "cheaper than a prawn sandwich".

Ratner's speech, delivered to the Institute of Directors, wiped an estimated GBP500m (US$841.5m) from the value of the company and Ratner left the following year.

The fear of 'doing a Ratner' is perhaps one reason for the reticence among many senior executives to speak openly about their business.

One food retail executive who seems to have no such hang-up is John Mackey, the maverick co-founder - and still chairman and CEO - of US organics retailer Whole Foods Market.

Mackey has faced much criticism in recent months. First, for his use of a pseudonym on an Internet forum to pour scorn on rival Wild Oats Markets - a business he subsequently bought. Mackey's conduct on the forum as 'radoheb' prompted an SEC inquiry, which cleared him of any legal wrongdoing.

The Whole Foods boss has also been questioned over his handling of a business that has suffered as recession-hit consumers have turned away from organics. And, all the while, Whole Foods' UK venture continues to suffer losses (although, in fairness, there are signs of improvement this side of the pond).

This morning (6 August), Mackey stands accused of 'doing a Ratner' after saying Whole Foods sells "junk".

Admittedly, it was an unfortunate choice of words and one that caused something to have been lost in translation.

However, behind Mackey's apparent impersonation of Ratner, lies an interesting strategic shift set to occur at Whole Foods - and one that means it is unlikely the organics retailer will go the same way as Ratner did in the Nineties.

As we outlined yesterday, Whole Foods is set to switch its focus from trying to please food-lovers to appealing to its core shopper - those interested not in the latest indulgent cake but healthier food. From "foodie to foodist", as Mackey puts it.

Whole Foods has had its problems but now claims to be seeing signs of improvement and the shift back to being a "foodist" has every chance of paying off, as the economy recovers.

Demand for organic food may be wavering in the recession but food executives around the world continue to espouse that health and wellness will remain key to consumer behaviour in the years to come. And Whole Foods, with its emphasis on natural food as will as organics, could again enjoy the buoyant performance that once made it one of the darlings of Wall St.


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