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Whole Foods co-CEO Walter Robb. (Anthony Jenkins/The Globe and Mail/Anthony Jenkins/The Globe and Mail)
Whole Foods co-CEO Walter Robb. (Anthony Jenkins/The Globe and Mail/Anthony Jenkins/The Globe and Mail)

The Lunch

Walter Robb: Whole Foods CEO on growing a grocer organically Add to ...

Walter Robb is the rare chief executive officer who’s happy to be flying under the radar.

How he manages to accomplish that is something of a feat: His company, the upscale U.S. grocer Whole Foods Market Inc., generates $10-billion (U.S.) in annual sales, and co-CEO John Mackey has attracted unwanted attention in recent years after a brush with the SEC and a newspaper column that touched off boycotts of its stores.

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Perhaps it has something to do with the hippie genes in the 57-year-old organic gardener. On a recent rainy morning at Toronto’s Sutton Place Hotel restaurant, Mr. Robb waxes poetic about worms in his garden’s soil. He describes with passion his dinner the previous Sunday, when he steamed kale and chard and baked different varieties of potatoes filled with fresh chopped tomatoes, chives and mushrooms – all from his garden. “It’s therapeutic,” he says. “It’s spiritual.” And later: “Look in my eyes. This is why I do this work – I really believe in what we’re doing.”

It’s not the typical talk of an executive of his stature. But his soft-spoken manner belies a strong appetite for risk, which has played a big part in the organic grocer’s gains. On this day, the mostly vegan eater is taking a different kind of risk, counting on the restaurant at least having soya milk for his coffee, although he’d prefer almond milk.

Mr. Robb’s entrepreneurial and plodding nature has played a key role in making the high-end Whole Foods an unlikely winner in today’s grocery wars, even as mainstream supermarkets struggle to make gains in a shaky economy. This week, with 316 stores in Britain and North America, the company reported an 8.7-per-cent lift in same-store sales in the fourth quarter. In contrast, those sales at Loblaw Cos. Ltd., Canada’s largest grocer, slipped 0.4 per cent in its last reported quarter.

As it turns out, one of Mr. Robb’s biggest bets came about a decade ago when he convinced his fellow executives at Whole Foods to expand into Canada.

The company was looking to branch out beyond the U.S., and Mr. Robb saw a fit in an unlikely Toronto location. Almost everyone warned him the fashion mall in the swanky Yorkville district was a dud: With an 80-per-cent vacancy rate at the time, it offered a lowly basement location for the organic food store at a moderate but not bargain-basement rent. He saw in it a site where a growing number of well-off condo dwellers and nearby office workers could snap up quality fare.

It took a few years to take off as shoppers slowly became familiar with the U.S. banner. Now, to keep up with burgeoning demand here, Whole Foods just expanded its Hazelton Lanes store by 25 per cent. Six other locations have been added in Canada, with three more leases already signed. Its ambitious goals call for a fivefold increase to 35 outlets here and $1-billion of annual sales within seven years.

Rolling out the first Whole Foods store in Canada in the ailing Hazelton Lanes sparked “vigorous arguments” within Whole Foods.

“Looking back on it, we were pretty naive about Canada,” Mr. Robb says, sipping an orange juice. “We didn’t really know what we were doing.”

Co-founded 31 years ago by crunchy-granola type Mr. Mackey, the other CEO who extols a brand of compassionate capitalism, Whole Foods suffered in the recession but is now outpacing conventional rivals. It helps that Whole Foods’ wealthy consumer is spending more freely and its aging, health-sensitive customer is also ready to shell out about 10 to 15 per cent more at Whole Foods for good-for-you products.

Having dual chief executive officers is unusual, and can sometimes be confusing. BlackBerry maker Research In Motion is a prime example of how questions about leadership can unsettle investors and compound other problems.

But while there are similarities between how the co-CEOs of RIM and Whole Foods split their jobs – Mr. Mackey is the more outspoken, familiar face to the public, and Mr. Robb is the details guy who deals with Wall Street and internally pushes the company to expand faster – Whole Foods’ leadership structure hasn’t shown any cracks.

“John’s the one people know,” Mr. Robb says. “I’m the one they don’t know. That’s okay.”

Their marketing strategy, which focuses on the health qualities of its products, is a different story. Just this summer, an upset Whole Foods employee at the Yorkville store penned a scathing resignation letter, describing the chain as a “faux hippy Wal-Mart.” He questioned Whole Food’s granola-munching “core values” and accused the chain of enviro-offences, including tossing mountains of food and failing to recycle properly.

“His assessment of the facts are palpably false,” Mr. Robb says after he orders steel-cut oats and fresh berries because “oatmeal is always a safe bet.” He points to his chain’s donations to food banks; at least 5 per cent of annual pretax profit goes to charity.

Mr. Mackey is the one who has raised eyebrows numerous times, even prompting the SEC inquiry several years ago about him using an alias in postings on Yahoo Finance in which he attacked competitors and praised his company’s financial performance. The SEC gave him a pass, but he ruffled feathers again in 2009 when he wrote in The Wall Street Journal that government had no business providing health care, touching off boycotts of the natural grocer.

Mr. Robb says he doesn’t think his co-CEO will go out on a limb again. He sums up their different profiles: “He’s not vanilla, but who wants vanilla every time? You want all the flavours. That’s what you get with John.”

In Mr. Robb, Whole Foods gets more vanilla. But the hippie spirit still lives in him. Even his three grownup children, who once resisted his organic ways, have become believers, he says.

He’s a believer in his company’s prospects in Canada, although he’s learned from bumps along the road. They range from mundane matters, such as having to use the Canadian spelling for words such as flavour, to bigger issues, including border delays and roughly 50-per-cent higher distribution costs because of the relatively small natural foods supply segment in Canada. Real estate is another tricky issue. It takes three to five years in Canada to develop real estate for a store, about twice as long as in the U.S. Canadians are more conservative and have stricter lending guidelines, he said.

In a major attempt to shave supply-chain costs, he “encouraged” his big U.S. distributor, United Natural Foods Inc., to snap up distribution assets of its Canadian counterpart, SunOpta, last year to gain savings. He also minimizes expenses by running the operation here out of Whole Foods’ Chicago and Seattle offices.

At our breakfast, he demonstrates his patience in tending to the decade-old, slow-budding business in Canada, answering questions well after he’s finished his meal. “We are ready to start our second 10 years and go a little faster.”

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CURRICULUM VITAE

Roots

- Born Nov. 15, 1953, in Boston, where he was raised.

- Considers himself “bi-coastal” (his parents divorced and his father stayed in Boston and mother moved to California).

- Graduated Phi Beta Kappa in 1976 with a Bachelor of Arts in history from Stanford University.

Beginnings

- After Stanford, moved to Atlanta where he and wife taught high school; planted an organic garden that the students helped take care of.

- Couple returned to California and worked in her family’s almond orchard before starting a health-food store.

- After divorce, moved to San Francisco with children, managing a small natural foods chain.

Career

- Was putting together a natural food store in Mill Valley, Calif., in 1991 when Whole Foods co-founder John Mackey convinced him to swap the lease for equity in Whole Foods.

- Started as store manager, quickly moved up the corporate ranks; became president of the Northern Pacific region in 1993; executive vice-president of operations in 2000; chief operating officer in 2001; co-president in 2004; co-CEO in 2010.

- Has an office in Emeryville, Calif., near his home and another at headquarters in Austin, Tex., where he has a condo. On the road 185 days of the year.

Personal

- Keeps organic garden at his San Francisco home.

- Single, with three grown children, who once resisted his organic ways but now have become believers. “I like basic, natural simple foods,” he says. “Brown rice, vegetables. Lentils are my favourite.”

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