Whole Foods Entry into Detroit: Too Cocky? or Brilliant?!

Whole Foods Market Inc. has recently made the decision to open a 20,000-square-foot store in Midtown Detroit. In the article “Whole Foods’ Detroit Gamble,” author John Bussey describes the market conditions that convinced Whole Foods to expand into the recovering city. The fact that Whole Food’s target market is high income grocery shoppers and Midwest operations president, Michael Bashaw, is comfortable (and even confident with) the new store location means either Midtown Detroit is no longer the urban danger zone it used to be, or Whole Foods is extremely confident in their ability to make communities economically healthier. Here are some of the main arguments for why Whole Foods’ may be successful with this new location:

• The chosen site for the store is a portion of Detroit called “Midtown,” and contains Wayne State University, the Detroit Institute of Arts, as well as the Detroit Medical Center. These institutions are stable employers and attract a demographic of higher education in the area. Higher education means a higher consideration for healthy eating — and also deeper pockets for more expensive eating.
• A Whole Foods store is very community based. In an urban environment that’s currently in a revival period, like Detroit, an upscale store that helps give the community some stability and a better image will be happily accepted by locals (except local grocers). The coming of the store is already anticipated as a great sign for future economic growth by local residents.
• Whole Foods will most likely pay a sub-market price for rent because development in the area is subsidized. Whole Foods’ first step into the risky Detroit market may act as an example for other businesses that see the value of potential subsidizing in an area on an upswing — which only helps attract more of the company’s target customer.
• Local farmers markets and gardens have essentially paved the way for a Whole Foods store. Bussey writes in the article that there are “more than 800 community gardens…[and] up to 40,000 people shop at its [Eastern Market] Saturday Market.” It’s not that Whole Foods sells the same products as a farmers’ market; it’s that Whole Foods attracts the same type of customer — those that are conscious of what they eat.

I think this is a great move on Whole Foods part. The market is ripe in Detroit and with support being pushed in the city’s direction revitalization is occurring. Some might say this expansion is too risky and might be a result of hubris, or that Whole Foods thinks it can create success just because it’s Whole Foods. I would argue that Whole Foods is expanding into an undervalued market, that this expansion is not some gluttonous pursuit of growth, and that the Detroit store will be one of the most profitable stores in the Whole Foods’ national chain.

But what do you think?