Food Fight

Amid the visual clutter of Aloma Avenue near Lakemont Avenue in Winter Park, the billboard may be hard to miss even if its message -- both real and implied -- is crystal-clear. It depicts a boy in a reversed ballcap chomping on a bright red apple; he is pictured on the big board along with the logo for Chamberlin's Market and Cafe, the locally owned natural-foods chain that, according to the sign, has been "Orlando's Natural Resource since 1935."

It is hardly coincidence that this new advertising message recently debuted on a billboard directly across the street from where Whole Foods, the national leader in natural-foods retailing, will stake its first claim in Central Florida. As Whole Foods' late-April opening approaches, Chamberlin's wanted its customers to know "we're still here," says Chamberlin's president Dale Bennett.

He adds: "We're certainly willing to compete for our customers."

And compete Chamberlin's must, unless it is willing to sell to Austin, Texas-based Whole Foods or its direct competitor, the Boulder, Colo.-based Wild Oats. Borrowing from concepts used by retail giants such as Wal-Mart, the two publicly owned natural foods chains have become a force in their multibillion-dollar niche by expanding or taking over local and regional chains in areas where they want to dominate.

Beyond affecting Chamberlin's, the trend's arrival will forever change the shape of this alternative-market niche here, consolidating business from one local power and a smattering of smaller outlets to one or two major players. It's an exact repeat of the fight currently being waged here by bookstore monoliths Barnes & Noble and Borders, and it's likely to bring lower prices and broader selection for natural-foods shoppers. And much as the book battle has hastened the demise of smaller book retailers, the arrival of Whole Foods could mark the beginning of the end for locally owned natural-foods stores, including Chamberlin's.

In the past two decades, the public's craving for natural and organic foods has exploded. Retail organic food sales rose from $178 million in 1980 to surpass $4 billion last year. But only a small percentage of consumers buy these specialty items at natural-food stores; most of the business is done by supermarkets that have expanded their natural-foods sections in response to demand.

Still, industry growth among natural-foods retailers has been remarkable.

"You're looking for quality foods without preservatives," says Debbie Deaver, who shops at Chamberlin's. And although supermarkets carry limited selections of similar natural products, she says the quality lags and "the assortment's not as good."

Will she check out Whole Foods?

"It's the same thing as when a new restaurant comes into town," Deaver says. "You want to go there and see what's on the menu. If the quality's better, you'll keep coming back."

Asked why she shops at Chamberlin's, another Orlando woman -- who asked to remain anonymous -- says, "It's the only health-food store in town I know about." But she did fondly recall a time when she lived in Palo Alto, Calif., and shopped at Whole Foods. "If Whole Foods is coming to town," she says, "they'll put this place out of business."

Since 1980 Whole Foods has grown from a single small, privately owned store in Austin to a publicly owned network of about 80 stores across America. Its Winter Park store will cover 22,000 square feet, slightly smaller than the average Whole Foods location and half the size of a nearby Publix supermarket. (Chamberlin's largest store, adjacent to the Winter Park Mall, covers 15,500 square feet.)

But Whole Foods has not relied only on new stores to strengthen its position. The company has also expanded into seafood processing, distribution companies, and a manufacturer and marketer of nutritional supplements and herbs. The result: In 1997, Whole Foods surpassed $1 billion in sales.

Such healthy earnings have triggered an unrivaled appetite for natural-food stocks. Led by Whole Foods' --127 percent increase, the retail and distribution segment of one natural business stock index finished 1997 up almost 56 percent. "It's a trend, as opposed to a fad," says Jim Lee, president of the competing Wild Oats chain. "We're riding the crest of a demographic wave."

Relaxing in a Winter Park bagel shop near the new store, Grace Richardson, Whole Foods' regional marketing director, says the company applies traditional business principles to tasks such as inventory and distribution. But while many big chains operate all their stores under one name, stores acquired by Whole Foods retain their names and, to some extent, individual local identities.

In addition, she says, organic farmers and natural-foods producers in the region -- as well local charities and community organizations -- are brought into the loop.

"We can still act a like a mom-and-pop operation," says Richardson. And while offering the full range of traditional health-food products, the markets also offer seafood, meats, beer and wine, as well as traditional grocery products such as Windex window cleaner.

"We're appealing to the natural-foods shopper as well as the person who just loves food," says Richardson.

Moreover, Whole Foods undercuts competitors with its own private-label products, directly targeting cost-conscious families who aspire to healthier eating.

Chamberlin's Bennett insists that he has no plans to add products in response to Whole Foods' presence; rather, the five-store local chain will continue its practice of constantly adding to its offerings. "We'll have everything they have except the fresh meats," he says.

At the very least, Chamberlin's -- which is preparing to open its sixth store at the new Oviedo Marketplace mall -- shouldn't anticipate acquisition by Whole Foods. "We haven't talked to Chamberlin's," says Don Moffitt, Whole Foods' southeast region president. "They're not the kind of stores we're operating."

Even so, Moffitt hints that Wild Oats might want to pursue Chamberlin's as a way to enter the local market with a leg up. And indeed, Bennett concedes that Chamberlin's might be willing to sell -- though he declined to comment about the possibility of Wild Oats as a suitor.

Yet before shedding tears over the loss of another family business to the increasing incorporation of America, it is important to remember that the late Warren Chamberlin sold his single-store downtown business to Bennett in 1972. That sale precipitated the store's expansion into the current small chain that makes its a more likely target for acquisition rather than extinction.

Still, Bennett insists that Chamberlin's is preparing to do battle, emphasizing his company's local contacts and customer loyalties. "They have stores around the country that don't do well. They have stores that do well," he says of Whole Foods.

"We'll be very competitive."

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