There have been rumors that Whole Foods might be exploring acquisition. The company has seen turbulence in recent years. And just this week, the company announced a shakeup of half their Board of Directors.
Store sales have been lagging. There is increased competition.
The first company to bring natural food to the mainstream enjoyed years of relatively unchallenged success. But as natural foods become increasingly popular among consumers, this is changing. And it will only continue to change moving forward.
It's a business case study that any entrepreneur can learn from.
Innovation Becomes Mainstream
Whole Foods served a very real and powerful purpose - they brought natural food to the front and center.
It was during a time when the natural food business was very, very small. Age-old Big Food players dominated the industry for decades.
The idea that natural food could become the preferred choice of millions of consumers likely seemed impossible. But that's exactly what has happened. Today, natural food is front and center. According to IRi's State of Snacking report, over 44% of consumers prefer natural and organic food.
And it was Whole Foods who enabled this movement - who partnered with small, natural vendors, who provided first access - enabling the industry to grow into what it is today.
Whole Foods has now created a problem for itself. The movement they've enabled has become so popular their competitors have all picked it up. The company's mission has become bigger than the company. It's changing Whole Foods' position. It's changing the food business. It's also changing Whole Foods.
What was once an innovation - a major natural food retailer - has now become the growing mainstream. The same has been seen with dozens of innovations over time. Smart phones, microwaves, televisions.
As an innovator or first mover, it's inevitable and it can happen to any business. For Whole Foods, this is no surprise.
Hitting the Peak Is Inevitable
Every business owner and stakeholder wants to see massive scale. But most businesses will only grow so big.
Even within a large market opportunity, size and scale can have limits. Certain businesses and industries have less growth potential than others.
There are also consumer adoption curves, where scale can seem on track to skyrocket, only to plateau. What seemed like a big, bright future was really just the natural cycle.
Many businesses hit this mark and expand by infiltrating into other categories and markets. Or, companies start to change the formula. Many have called for Whole Foods to start using traditional grocer practices, like coupons and incentives.
But, just because a business can expand into new areas, or grow by new means, it doesn't always mean it's the best idea.
Mass scale can hurt the product, it can change the consumer experience. It can hurt the business. Sometimes it's better to realize you've hit your max size and let your mission continue on gracefully instead of trying to grow, grow, grow.
Great, Profitable Companies Aren't Always Big - They're The Best
It's understandable that Whole Foods wants to grow as large as possible. Many of the moves it's making today may help drive a stronger future for the company in the years to come.
But it's important to recognize that many incredible, very profitable businesses are as big as they're going to get. They've reached their maximum size. They're not the largest companies in the world - but they are the best in their class and they're enormously valuable.
Their focus shifts from trying to reach mass scale because they're already there. They're now centered on staying at the top.
Continuing on gracefully means different numbers, different goals. It becomes more about retaining revenue combined with driving new revenue centered on customer acquisition and maintaining quality product.
The drive becomes about longevity - keeping the pace, continuing to evolve when needed, and growing within your core business and market.
Whole Foods may very well be at this place, and that can be just fine. It might mean different returns than stakeholders are accustomed to during the company's rise to the top. But it doesn't mean Whole Foods is any less valuable. It may have just reached its stride.
Your business may have endless growth potential. It may not. The key is to recognize when you've hit the peak and how you'll continue to maintain a solid ride.