By Rocco Pendola

I'm watching Howard Schultz build an empire at Starbucks (SBUX). Outside of Apple (AAPL) and Amazon.com (AMZN), there's not another company doing what Starbucks does, as well as it does.

Starbucks is a tech company in a retail coffeehouse's clothing. You might be tempted to compare it to a retailer like Whole Foods Market (WFM), but Starbucks really is a superior company for the long-term.

On most days, I have nothing even remotely negative to say about Whole Foods from consumer and investor perspectives. I love the company and really like the stock. However, when I conduct a rigorous comparison of Starbucks and Whole Foods, I start to see the latter's flaws.

 Starbucks doesn't win out because of scale and size -- it wins because it's cutting edge.

Thanks to a colleague, I got my hands on a Starbucks Steel Gift Card. This is the premium Starbucks card, loaded with $400 and retailing for $450 in a limited quantity of 5,000. The cards sold out in minutes. And now they're popping up on eBay for prices as high as $700 or $800.

Why is this relevant? It's relevant because the Starbucks iPhone app I downloaded a few months ago has made me a loyal customer. I hit Starbucks at least once a day now, sometimes twice. The app got me in the door. Combined with friendly baristas and a solid drink, it keeps me coming back. Talk about driving engagement. That's exactly what the app does. It's exactly what Starbucks intended it to do. It's brilliant.

Whole Foods needs to do something like this. The standard Whole Foods customer, at least in my neck of the woods, is the typical Starbucks customer. They're tech-savvy, iPhone-toting yuppies who already have or are starting to have guppies. Playing with an app in a grocery store is the ultimate diversion from the everyday monotony of life.

There's no excuse not to have a shopping app. Safeway (SWY) has a pretty solid one, Whole Foods does not.

Whole Foods doesn't just needs technology -- it should be more aggressive about growth. I think it should buy Trader Joe's, and here's why.

If you live in a place without a Whole Foods or Trader Joe's, you want one or both. If you live in a place that has both you probably shop at both. I go in waves, but ultimately I split my time almost evenly between the two stores.

Trader Joe's has more than 350 stores, highly concentrated in California but scattered across the nation and growing fast. Trader Joe's stores tend to be much smaller than Whole Foods stores. In the last couple of years, as Whole Foods has focused more on its "generic" Everyday 365 line, the price gap between the two has narrowed. While Whole Foods still sells items at a considerable premium to Trader Joe's, it's no longer Whole Paycheck. You can still drop absurd amounts of money on cheese and salami, but you have more choices than ever before at various price points.

If Whole Foods bought Trader Joe's, it could turn its stores into one-stop-shops for Everyday 365 products and Trader Joe's-branded items. Make it the Whole Foods Market corner store with a small produce section and an expanded beer section. A handful could be turned into full-fledged Whole Foods stores, or used to test concepts.

I may sound like I'm dreaming. Either way, Whole Foods needs to do more to stay competitive long-term. It owns a lifestyle consumer today -- but that could change in a flash.

I understand that messing with the Trader Joe's concept would upset a lot of people, but even the diehards would get over it. They all shop at Whole Foods anyway (even if they say they don't) and they're the same people who claim to hate Starbucks while sipping a grande, extra-hot, double, skinny, no-foam latte with a shot of peppermint.

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