Executive Summary

As reported in its Annual Report on Form 10-K for fiscal year ended
September, 27, 2015, Whole Foods Markets, Inc. continues to be the
leading natural and organic foods supermarket (and the 5th largest
public food retailer and 10th largest food retailer based on industry
2014 sales rankings), currently operating 431 stores in 42 U.S. states
and the District of Columbia, 10 in Canada and 9 in the United
Kingdom. In this case study, WFM or the Company will refer to the
parent company and the name Whole Foods will refer to its stores
and grocery business generally.

What started as a single small natural foods store called SaferWay in

Austin, Texas in 1978 led to the opening of the original Whole Foods
Market in 1980, followed by a combination of building new stores and
acquiring existing ones. WFM went public in 1992 and not only
continued to increase the number and size of Whole Foods stores, but
also raised industry standards for the production and distribution of
natural foods as well as promoting respectful and sustainable farming
and business practices. Additionally, WFM is regularly recognized as
one of most desirable employers, with human resources and
management practices that allow for more regional discretion and local
involvement plus genuine employee input, enhanced employee

education and development, and relatively higher compensation within

the industry.

Founder and CEO John Mackey strives to balance his health- and
environment-oriented ideals with the realities of operating a complex
and highly competitive business profitably with an approach he calls
conscious capitalism endeavoring to benefit all company
stakeholders employees, customers, community and shareholders
rather than treating the first three less than the fourth. [FN 1]

While the actual and/or perceived value of Whole Foods offerings have
commanded generally higher retail prices, WFM is under everincreasing pressure to lower prices and justify any premium ones as
various competitors increase their natural/organic products while
pursuing higher-volume, lower-profit strategies. This dilemma is
common to all retail industries; however, the stakes are elevated
because of the emotional connection between customers and their
source of day-to-day sustenance when evaluating the benefit of paying
more for something when the additional benefits are less tangible and
less immediate. WFM continues to be referred to derisively as Whole
Paycheck because its grocery prices are usually higher relative to
traditional grocery stores, warehouse clubs, dollar stores and

discounters; that perception is widely held and discourages a large

target audience from entering or returning as customers.

WFM has earned a reputation as a good citizen and a trustworthy

source of high quality health foods both grocery and prepared. Its
generally higher-income, health-conscious core customer base is loyal
as are its employees, which are primarily non-union. The Companys
primary challenges to continue growing and maintaining its industry
leader status must be addressed via responding smartly to
competitors pricing strategies and garnering increased public
awareness and appreciation of WFMs differentiated offerings and
ethical principles.