IOI has published several articles and in-depth research pieces on both Wal-Mart (WMT) and Whole Foods Markets (WFM)*, so when I saw an article on Priceonomics entitled Who Spends More: The Whole Foods or Walmart Shopper?, I had to take a look. Long story short, the statistics regarding spending patterns for shoppers at these two, very different retailers are remarkably similar. Unlike my friend and Boot Camp attendee Tod S., who is a professional retail investment analyst, I’ve never spent much time looking at retail companies, so the comparison was surprising and interesting to me. The article discusses other brick-and-mortar retailers and one of the other surprises to me was to see the name of the retailer whose shoppers leave the stores after paying far and away the most on each trip. Can you guess what it is? Like a riddle or a mathematical puzzle, the answer makes sense after you see it.
Another article which is also related to Wal-Mart and Whole Foods is one that was published by the Atlantic entitled The Great Grocery Smackdown. This is actually an older article, from March 2010, but I missed it when we were doing our research in December on Whole Foods. At which retailer do you think the following photo was taken?
“WalMart Vs. Whole Foods” for The Atlantic
Austin, TX
Of course you know that this will be a trick question, so you’ll likely answer correctly: Wal-Mart. However, at first glance, I myself assumed that this was a snap taken in a Whole Foods store. This is the point of the Atlantic article — Wal-Mart did not become a juggernaut in the world of brick-and-mortar retailing by accident. Wal-Mart managers are professionals. They are good at what they’re doing and they don’t like getting their a**es handed to them by some overpriced upstart froo-froo market from Austin. The fact that a lot of the “distinctive” elements of Whole Foods’ value proposition can be and is being recreated by Wal-Mart is bad for Whole Foods and is at the crux of our bearish recommendation on the company (see “Detailed Analysis of Whole Foods Market” linked below).
* NOTES:
- Short Put on Wal-Mart (Oct 14, 2015)
- Wal-Mart Valuation Graphs (Oct 27, 2015)
- Detailed Analysis of Whole Foods Market (Dec 10, 2015)
- Detailed Update on Wal-Mart Recommendation (Dec 24, 2015) [Related to October 14 article]
- A Christmas Present from Wal-Mart (Dec 24, 2015) [New Tear Sheet]
- New Tear Sheet on Whole Foods Market (Dec 30, 2015)
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