Even people who love to shop at Whole Foods sometimes jokingly call the store “Whole Paycheck.” Why, then, did the company recently decide to open a store in Detroit—a city that in recent decades has been known mainly for its depressed economy and plummeting population?

Although Whole Foods has a reputation for moving cautiously on expansion decisions, the Detroit store represents the first time the company chose to build in what the Detroit Free Press described as a “distressed urban location.”

To arrive at the decision, Whole Foods’ executives looked at a variety of criteria. The neighborhood to be served by the store, which includes Wayne State University and the Detroit Medical Center, has recently experienced population growth. And in nearby downtown, Quicken Loans rented office space for its Michigan staff of 3,000. Thanks to these employers, there is nearby traffic of professionals who might be attracted to an upscale store. In fact, Whole Foods sees pent-up demand in the area because supermarket chains have fled the city, forcing residents to drive to the suburbs to buy groceries.

Whole Foods also saw qualities in Detroit suggesting that its residents would embrace the new store. As the retailer’s employees worked with citizens’ and business development groups, they noticed practical evidence of an interest in eating well. For instance, residents have established more than 800 community gardens in Detroit’s acreage of vacant lots. In addition, tens of thousands shop at Detroit’s popular Eastern Market, one of the nation’s largest farmers’ markets. Taken together, Red Elk Banks, Whole Foods’ operations chief in Michigan, says these practices represent important factors in the decision to open a Detroit store.

Complementing these practices, Whole Foods also obtained demographic information supporting the idea of a new store in Detroit. This information showed a desire for more access to organic foods. The information also showed buying power: Detroiters have been spending $200 million annually in the suburbs. By choosing a location near freeways, Whole Foods hopes to capture some of the people traveling between the city and the suburbs.

Whole Foods’ president of Midwest operations, Michael Bashaw, told the Wall Street Journal, “We certainly expect [the Detroit store] to be profitable.” Time will tell whether or not Bashaw was a good forecaster and whether the site selection better illustrates keen business insight or foolish optimism.¹