With supermarkets wasting over 5% of all their products and waste in western countries being significantly higher than Sub-Saharan Africa and Southeast Asia(95-155kg per person compared to 6-11kg per person), there was an obvious amount of food waste that could be avoided. To go along with this stat, approximately 15% of households were food insecure in 2010, many areas did not have access to a supermarket with healthy options, and other areas naturally directed consumers to an unhealthy diet because they were saturated with fast food establishments. These are just a few issues with our food infrastructure in America and other western countries.
Doug Rauch, the former president of Trader Joe’s, had been long bothered by this and envisioned a store which would sell products, primarily healthy options, that while still completely edible and safe, were not able to be sold in standard retail stores. Rauch identified Roxbury, a low-income neighborhood in Boston, as the initial location because of the high poverty and obesity rate there.
While reducing overall food waste was part of his goal, the other part was improving the community. While offering cheap and healthy food was one mission, Rauch also envisioned the store as a community center which offered cheap, healthy, tasty, and quick alternatives to fast food as well as a sort of job training center for local youth. Because of tax credits and reduced garbage fees, Rauch assumed that persuading supermarkets to hop on board would not be a problem.
After researching his idea more and talking with possible partners and supermarkets, Rauch ended up with three options.
One, join with Whole Foods who wanted to be exclusive and found a non-profit of which Rauch would be President and CEO but Whole Foods would control all of the board seats. Two, Next Street, an investment bank aimed at helping businesses who wanted to make a social impact, had offered to enter into a partnership with Rauch but this plan kept Rauch solely in the driver’s seat of his project and allowed him unlimited growth potential.
The third was joining forces with the non-profit Feeding America. Feeding America had debated entering the retail market for some time and the goal of the two are very similar. Ultimately, I recommend taking Whole Food’s deal. While Rauch would give up much control of the company and might not get as much credit as otherwise, there are numerous undeniable benefits to such a partnership. To start with, Whole Foods is committed to providing healthy, high quality food and supporting organic and sustainable agriculture; while not exactly the same, their goal is similar and along the same lines as what Rauch wanted to accomplish.
Another benefit is that they were immediately on board with some of his ideas such as shipping short-code products early. This was a game-changer because it would allow greater inventory stability in-store. One final benefit is that quality control and distribution would be much easier to control and coordinate.
While entering an exclusive partnership with Whole Foods does limit the potential reach of Rauch and his vision, they did already have a high density of stores in metropolitan areas which would give a high floor at very least. If Rauch values making a positive impact more than taking credit for making an impact, the Whole Foods deal is the safest and allows quicker start up than the other alternatives and is the smart decision.