The FTC is making a move to halt the planned assimilation of Wild Oats markets by the Whole Foods collective, on the grounds that it would raise prices for consumers. This seems unlikely for precisely the reason cited in the article linked above: Whole Foods isn’t just competing with other organic food stores, it’s competing with all other supermarkets. One of the big benefits of Whole Foods, in fact, has been the way it’s pushed traditional groceries and supermarkets to stock a wider array of organic, vegetarian, and humanely-produced food products, so that it’s now relatively easy to find (say) cage-free eggs at the neighborhood Giant or Safeway. Given the size of the average Whole Foods store, they’re only viable if they’re appealing to large numbers of people who aren’t die-hard organic consumers, which means their leeway to inflate prices is going to be constrained by competition from mainstream groceries even if all the local organic markets go under. The FTC apparently disagrees, asserting:
In addition, premium natural and organic supermarkets seek a different customer than do traditional grocery stores,. Whole Foods’ and Wild Oats’ customers are buying something more than just the food product — they are seeking a shopping “experience,” where environment can matter as much as price.
So they’re being punished for having nicer stores?
Even if we grant the agency’s premises, though, the FTC’s view is a little perplexing. Just eyeballing the companies’ respective websites, it looks like there are about 70 Wild Oats stores and somewhere in the ballpark of 180 Whole Foods stores in the United States, and very few of them appear to be in direct competition. That is, the vast majority of the Wild Oats stores seem to be located in states or cities where there isn’t a Whole Foods. Unless people are routinely driving long distances for their week’s groceries, then, there are relatively few cases where the merger would reduce the number of local options even within this niche market.