How Whole Foods Market, Inc. (WFM) Transformed Its Relationship With United Natural Foods, Inc. (UNFI)

Page 1 of 2

Two weeks ago, I interviewed Whole Foods Market, Inc. (NASDAQ:WFM) co-founder and co-CEO John Mackey in front of a live studio audience at Motley Fool headquarters. Mackey had just published Conscious Capitalism: Liberating the Heroic Spirit of Business with co-author Raj Sisodia and stopped by our Alexandria, Va., offices on his book tour.

I recommend Conscious Capitalism. It’s part philosophy, part memoir, and part management theory, and it includes Mackey’s own anecdotes of turning Whole Foods into a $16 billion business with more than 70,000 employees (called “team members” at Whole Foods).

Whole Foods Market, Inc. (NASDAQ:WFM)The aim of business, argue Mackey and Sisodia, is not merely to profit; it is to serve all key stakeholders, including customers, employees, suppliers, local communities, the world, and, yes, shareholders.

One candid section (pp. 116-117) in the book comes when Mackey recounts his experience with one of Whole Foods’ key suppliers, United Natural Foods, Inc. (NASDAQ:UNFI) . In the following video clip, someone from our live studio audience asks Mackey about the evolution of the Whole Foods-United Natural relationship. (Run time: 3:49; there’s also a lightly edited transcript following the video.)

Audience question: I know you talk in your book about United Natural Foods and your relationship — it seems to have progressively gotten better as time goes on, which is interesting to me because they hold such a market-leading position in the distribution of most of what you sell. So I wondered, first, could you talk a little bit about that relationship, maybe shed some light into managing your relationship with management there? And then from a long-term perspective, where do you see your relationship with United Natural Foods going in the long term?

John Mackey: Well, I’ll talk a little bit about it but I’m not completely comfortable talking about it too much, for lots of reasons. …

UNFI, for a long time we had a typical relationship with them which is not unusual, which is somewhat of a mistrustful, adversarial relationship, which — think about, say, the Wal-Mart Stores, Inc. (NYSE:WMT) model, which is, let’s grind our suppliers down and get, extract every last possible dollar we can out of them and then that’ll help lower our prices and we’ll be more competitive again in the marketplace. And so you had that kind of adversarial relationship with the suppliers; you’re trying to do exact same thing.

We criticize that in the book — we don’t pick on Wal-Mart per se, I think we use General Motors Company (NYSE:GM) as an example in the book, about how they’ve they grinded down all their suppliers when they got into financial trouble, and some of those suppliers failed and most of them — and it worked for them in the short term, because in the short term the suppliers are captive. They don’t have alternatives. But in the long term, they begin to move their business away from you to the alternative customers. They may still do business with you, but you may not be getting their highest quality, their best service, their best prices — because they’re not so vulnerable anymore.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!