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Whole Foods Gets a Whole Lot Bigger

MarketWatch has reported that Whole Foods has purchased rival natural-foods grocer, Wild Oats, for $565 million.

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Whole Foods has struggled in recent months, reporting a decline in fiscal first-quarter profit, largely due to increased competition from larger grocery store chains — including Wal-Mart — that have begun offering natural and organic foods. As conventional supermarkets try to cash in on Americans’ increased health consciousness and willingness to pay more for luxury food items, shoppers no longer need to visit specialized food markets to get their soy-milk, organic vegetables, or tempeh-burgers.

By purchasing its smaller rival, Whole Foods can increase its presence in the Pacific Northwest, the Rocky Mountain regions, and Florida which may help it to slow the erosion of its marketshare by its conventional counterparts. The merger follows on the heels of another recent grand gesture by Whole Foods CEO, John Mackey.

In November, Mackey wrote a letter to all employees explaining that, among other changes to the company’s compensation structure, he would no longer be receiving a salary.

“I am now 53 years old and I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart. Beginning on January 1, 2007, my salary will be reduced to $1, and I will no longer take any other cash compensation.”

Do you think Mackey’s moves will help Whole Foods attract the best employees and keep Goliath-like competitors such as Wal-Mart from poaching their customers?

Whole Foods stock rose nearly 5% to $47.90 in after-hours trading.

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