Whole Foods struggles

Organic food has never been so popular among American consumers. Ironically, that’s bad news for the brand that made organic a household name — namely, the Austin, Texas-based Whole Foods.

On Wednesday, Whole Foods reported what is arguably its worst performance in a decade, announcing its sixth consecutive quarter of falling same-store sales and cutting its outlook for the year. The company is closing nine stores, the most it has ever closed at one time. A mere 16 months ago, Whole Foods predicted it would grow its 470 U.S. locations to more than 1,200.

The problem is one that chief executive John Mackey probably didn’t predict when he first opened Whole Foods as a neighborhood natural foods store 36 years ago: Organics, then a fringe interest, have become so thoroughly mainstream that organic chains now have to face conventional big-box competitors. Mass-market retailers were responsible for 53.3 percent of organic food sales in 2015, according to the Organic Trade Association; natural retailers clocked in just north of 37.

And Whole Foods is hardly the only store feeling the squeeze: Sprouts and Fresh Market, the secondand third-largest publicly traded organic stores, have also seen falling stock prices.

“Whole Foods created this space and had it to all to themselves for years,” said Brian Yarbrough, an analyst at Edward Jones. “But in the past five years, a lot of people started piling in. And now there’s a lot of competition.”

In many ways, the story of Whole Food’s decline is also the story of how the organic movement took over America. Between 2005 and 2015, sales of organic food increased 209 percent, according to the Organic Trade Association. Last year, organic sales topped $43.3 billion.

The driving force behind this growth, most analysts agree, is none other than millennials: Consumers aged 18 to 34 are the largest buyers of organics, and they’re the most likely to consider themselves “knowledgeable” about their food. As they came of age, mainstream grocery chains have been forced to adapt, too.

Wal-Mart ramped up its organics selection in 2006. Kroger introduced its Simple Truth brand in 2012 — the store’s CEO Mike Ellis later said it was the store’s “most successful brand launch ever.” Aldi announced plans for a $1.6-billion U.S. expansion, with much of that growth aimed at offering “a wider range of organic and gluten-free products.”

By volume, the largest organic retailer in the U.S. is currently believed to be Costco — which in 2015 sold $4 billion of organic produce and packaged foods.