Whole Foods Market buys Wild Oats!

Did you see the business news just a bit ago? If not, now you know... Whole Food Market (NASDAQ:WFMI) is purchasing rival Wild Oats (NASDAQ:OATS) for $565 Million.

I personally have been waiting anxiously for Whole Foods to open their new store here in Cleveland, Ohio, which was first supposed to be open the middle of last year, and at last check they were claiming it would open in March of 2007. Since we already have a Wild Oats store here in town, I now have to wonder exactly what their plans will be. Will they close the existing Wild Oats and consolidate into one new Whole Foods store, or will they decide instead to rebrand the Wild Oats as a Whole Foods, at least for a while (perhaps until their lease at the location ends) or what? It'll be interesting to see how this plays out.

We don't often shop at Wild Oats, mainly because if we take time to drive to the store here in town, it is literally 1/2 mile from the nearest Trader Joes. And, if I had to choose between the two, the obvious choice is Trader Joes - since on a price-comparison level, they are much lower priced on the same products. I have seen some items cost literally twice as much at Wild Oats as they do at Trader Joes. The down side to TJ's is that they are a much smaller store, and carry a much more limited selection. So, we quite often need to stop at Wild Oats (or the Mustard Seed Market) to acquire a few of the harder-to-find items.

So, this deal between WFMI and OATS makes me wonder what will become of product pricing. Investors see this merger as a win-win, and both stocks are up significantly in the pre-open today. The obvious reason for this is that these two brands will no longer be competing with each other, and presumably they will have more pricing (and profit) power with their consumers. And, you know what that means: if this presumption is true, then Whole Foods will be able to capitalize on this acquisition through newfound power to control prices better. I.e., you may end up paying more for the same thing! (not good news for us consumers)

I still think players like Trader Joes will keep Whole Foods on guard, and may help alleviate some of the pricing concerns I have. But, as I mentioned earlier, TJs (at least around here) tends to have small stores and smaller selection, so Whole Foods will still be able to price many items (not shared by both stores) as they'd like. Whole Foods stores tend to have an amazing selection of products - I was nearly awed by the store in Columbus, Ohio (which, I understand is the second largest in the country).

So, I guess I just have to sit back and watch this play out. And, Whole Food, please get around to opening the Cleveland store soon -- I'm tired of waiting!!