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WHOLE FOOD

MARKET

COMPANY BACKGROUND
CORE VALUE, VISION & MISSION
FINANCIAL REPORT
THREAT, COMPETITIVE ENVIRONMENT
WHOLE FOOD MARKET STRATEGY,

STRUGGLING TO GROW IN AN INCREAS


INGLY COMPETITIVE MARKET

SWOT ANALYSIS
KEY TO SUCCESS, WHY WHOLE FOOD

COMPANY BACKGROUND

highest quality natural and organic products


w/premium price

Is the worlds leading retailer of natural and organic


foods

In 1980, become a company in a single natural food


market by John Mackey, (current president and cofoun
annual
percentage
salesTexas
by product
der of Whole
Foods)
in Austin,
(Headquarter)
category

Was recognized as Americas first national certified


organic grocer

offers 4,400 items ex. Produce, Seafood, Grocery,


Meat and Poultry, Prepared Foods and Catering with hi
ghly focusing on perishable and prepared products, w
hich account for about two-thirds of sales.
Owns 4 private label products

Main target is typically have a high percentage of


college graduates 40% or more of the residents

have a college degree as they are more likely to be


aware of nutritional issues

Encourage team members as well as strive to take care


of consumers, bc they are as life blood of business
and the two are interdependent on each other.

Team members
100000
50000
0 19
1980

53500
2010

78000

2013

CORE VALUE
Stake

Whole Foods has identified seven core value


Prod
that specifically express the purpose of its
uctbusiness and not only provides profits, but
creates value for its stakeholders:

custo
Selling the
holde
mers
highest quality
rs
natural and
Promoting the health of its
Satisfying and delighting its
organic
stakeholders through healthy
customers
products
eating education
available
Partn
er
ships

Creating ongoing winwin


partnerships with its
Envir
suppliers

on
ment

Team

Supporting team member


happiness and excellence

profit
s
grow
th

Caring about
Creating wealth
communities
through
and environment
profits and growth
Serving and Support Our Local and Global

CORE COMPETENCIES/
value

Provide the highest quality natural and


organic foods
Conveying to the customer the high
quality of product
Offer a healthy lifestyle and unique
experience in the stores
Caring about communities and
environment

VISSION AND MISSION


Whole food manage with Holistic Actions
of sustainable
future
VS to
uniquely
for VISSION
a Sustainable
World that
strive
MISSION
conduct
business in a manner consistent with
highly selective
their mission and vision. Becauseabout
company
what they
sell
Business
believes
they
are
on
the
path
to
a
children
es
sustainable future.
Companie
s,
governm
ents,
institutio
ns

dedicated to
stringent quality
standards

People

committed to
sustainable
agriculture

FINANCIAL REPORT

From whole food market annual stakeholder report 2013, The


data indicated that financial in WFM is in the good trend since
2009 to 2013, which net sales, operating income, free cash

Net income, revenue


Free cash flow
http://financials.morningstar.com/ratios

/r.html?t=WFM
http://qz.com/206843/whole-foods-thinks-

its-too-expensive/
down in 2009

THREATAndIncreasingly competitive
market

200
8

So expand private label products 365 Everyday Value and


365 Organic. With the policy is their 365 product lines
must match prices of similar products at Trader Joes and
create pre-made meals sector serve people that interested
in eating healthy and saving money

Non natural organic: 2007


The limited resources within the U.S., Wal-Mart begun
importing natural and organic foods from China and Brazil,
which led to it coming under scrutiny for passing of non
natural or organic products as the real thing

200
7

CCOF tells customers that Whole Foods are not only


following the USDAs Organic Rule but opening their stores
up to third-party inspectors and following a strict set of
operating procedures designed to ensure that the products
sold and labeled as organic are indeed organic procedures

Recession: 2008
Customers were not willing to spend their money so easily
and adults were eating out 50% less than they were prior
to the economic crash
FTC: 2009
The Federal Trade Commission (FTC) focused their
attention on the merger on antitrust grounds because
they are afraid of monopoly situation which The dispute
was settled in 2009

Whole Foods closing 32 Wild Oats stores and agreed to


selling the Wild Oats Markets brand

COMPETITIVE
ENVIRONMENT
demand for organic and natural
foods because consumer increasingly
focus on lead to

Consumer
focus
- eating healthfully
- environmental
sustainability,
- the green movement

Organic
food
industry

all supermarket including


- traditional supermarkets are now introducin
ex WalMart, King Kullen, StopnShop,
Krogers, Albersons, Safeway and Fairway
- discounted retailor ex , Walmart, Target Sam
Costco
- additional grocery store ex Stop, N Shop an

Main Competitor
Past

In the early to mid


2000s, its biggest
competitor was Wild
Oats. In 2007

Now
- Rival Organic Chain
- Mass market retailor

COMPETITIVE
ADVANTAGE
even if Wal-Mart stocks hundreds of organic products on its shelves, the majority will still be the conventional
stuff that most Whole Foods shoppers are trying to avoid. Add in the amazing selection of (high-margin) prep
ared foods that Wal-Mart and other grocers won't compete on, and Whole Foods' competitive advantage rem
ains as strong today as ever,2014
http://www.fool.com/investing/general/2014/04/12/did-wal-mart-just-kill-whole-foods-competitive-adv.aspx

Empowerment = Trust While small teams are essential to optimizing the flow of organizational trust,
equally important is the philosophy of empowerment. The effectiveness of teams is tremendously enhanced w
hen they are fully empowered to do their work and to fulfill the organizations mission and values. Empowerm
ent must be much, much more than a mere slogan, however. It should be within the very DNA of the organiza
tion. Empowerment unleashes creativity and innovation and rapidly accelerates the evolution of the organizati
on. Empowered organizations have tremendous competitive advantage because they have tapped into levels
of energy and commitment which their competitors usually have difficulty matching.
Nothing holds back empowerment more than the leadership philosophy of command and control. Command
and control (C&C) is actually the opposite of empowerment and it greatly lessens trust. C&C usually involves d
etailed rules and bureaucratic structures to enforce the rules. Such detailed rules almost always inhibit innova
tion and creativity. People get ahead in the organization not through being innovative, but by following the rul
es and playing it safe. C&C may produce compliance from the workforce, but it seldom unleashes much energ
y or passion for the purpose of the organization. Empowerment = Trust. C&C = Lack of Trust., WFM

Whole Foods primary objective goes


beyond 100% customer satisfaction with
the goal to delight customers in every i
nteraction. So they serve customer with
high standard food
They have a competitive advantage
when it comes to the size of their stores.
Very few natural foods stores have store
s larger than 20,000 square foot

Free cash flow compare w/competitiv


e

http://www.fool.com/investing/general/2

014/06/04/whole-foods-competitors.aspx
http://www.fool.com/investing/general/2
FREE CASH FLOW 2013

015/03/11/why-whole-foods-market-inc-sh
2.79
3
ould-fear-kroger-co.aspx
2.5

1.5

1.28

0.95

0.5
0
2.79, 1.28,
0.945
WHOLE FOOD

KROGER

SPROUT

WHOLE FOOD MARKET STRATEGY

COMPETIT
IVE
STRATEGY

food market strategy use competitive strategy and Growth s


their profit. Competitive strategy focuses on diferentiation s
gh quality, innovation and service to stand out from competi
premium price more than emphasizes on the low cost while
y focuses on expansion Acquisition and brand strategy make
own over the years.

GROWTH
STRATEGY

- Differentiation
Strategy

- Expansion
Strategy
- Acquisition

quality

innovation

private label products


perishable product
Whole sales
Foods diferentiates itself by maintaining a commitment to natural

and organic products, high quality standards, emphasis on perishable


product sales, and highly
dedicated and empowered employees who deliver
Differentiation
exceptional customer service. These diferentiating factors have created a
Strategy
loyal customer base that values
the Whole Foods experience These
differentiating factors have created a loyal customer base that values
the Whole Foods experience Esp in quality as excellence and innovation
that allows
them toproducts
charge a premium price for premium products
atural
and organic

go green movement

empowered employees
shopping experience

differentiation strategy

commitment to natural and organic products: moreover they Whole Foods


products differ by geographic regions and local farm specialties: carefully resear
ched to ensure that they are meeting the demands of local community
high quality standards: products have to undergo a strict to determine if they
are whole food material
emphasis on perishable product sales; it is the 2/3 of its sale
and highly dedicated and empowered employees; ex team member who
deliver exceptional customer service are well trained and have good service
Economic recession, Whole Foods saw this as opportunity to enter a new area of
business, the pre-made meals sector. They began selling pre-made dinners and
lunches marketing towards those still on the go but interested in eating healthy
and saving money. Offering the feed 4 for $15 deal, they were able to recaptu
re some lost salesIf Whole Foods continues to come up with innovative ideas to
still compete during a recession, there is much opportunity as the economy evol
ves and climbs up the economic life cycle into recovery, expansion, and boom st
ates

the primary purpose of carrying these brands is


to differentiate Whole Foods from its
competition. Whole Foods chooses to not carry
products such as Coca-Cola and Pepsi, but rathe
r carries 365 Organic Cola. This alternative is in l
ine with its organic brand image and provides v
alue to its customers
Difference shopping experience ex
band wagon of go green movement From this
the customers are not only local people but also
category of upscale, educated, new age people

-Whole Foods has grown over the years through mergers,


EXPANSION
acquisitions and new store openings
-PRICE few selected area but they are more focus on
quality and service as a means of standing out from the
competition

GROWTH
STRATEGI
ES

BRAND IMAGE

&

ACQUISITION

Historically grown

EXPANSION &
ACQUISITION
WHOLE FOOD MARKET NUMBER OF STORES
600
500

500

400

367

300
200

276

284

417

299

175

100
0
2005

2007

2009

2011

2013

2015

2017

Whole Foods strategy of expansion and acquisition has fueled growth in net
income
since the companys inception which the number of stores in Whole Food Market

BRAND IMAGE
Are achieved through their four core
competencies

Conveying to the
customer the high
quality of product

Ofer a healthy
lifestyle and
unique
experience in the
stores

PRODUC
T

CUSTOM
ER

Provide the
highest quality
natural and
organic foods

STORE

ENVIRO
N
MENT Caring about

communities and
environment

STRUGGLING TO GROW IN AN
INCREASINGLY COMPETITIVE MARKET

Result in:

Old: traditional StrategyAVG weekly sales per store


Just focus on expansion and
acquiring stores strategy, with
just looking to increase overall
sales by opening new stores
As the company expands, this
task increases in complexity and
magnitude

Result in:
This increase in competition
can lead to the introduction
of price wars where profits
are eroded for both existing
competitors and new

have decreased over the


last number of years despite
Sales overall increase

Solve:
>>> should focus on
growing sales within the
stores they have

New: Brand image


Strategy
increasing number of
competitors moving into the
organic foods industry

Expansion and Acquisition Strategy

both are Costly


IMPACT OF EXPANSION
- increasingly difficult to
find appropriate locations for
new stores that are first and
foremost in an area (2010,
29>17)
- reduces the efficiencies
because company has a big
adaptation such as

IMPACT OF EXPANSION
Future acquisitions will be more
difficult for Whole Foods as the
FTC will be monitoring the
company closely to ensure that
they do not violate any federal
antitrust laws through the
elimination of any substantial
competition within this market.

Brand Image Strategy


IMPACT OF BRAND IMAGE
58 Unlike low-price leaders such as WalMart, Whole Foods dominates because of
its brand image,
>> which is trickier to manage and less
impervious to competitive threats.

SWOT Analysis
- Brand image and
loyalty
- Employee talent and
retention
- Extensive product
oferings

- Growth Abroad
- Strategic acquisitions
and
integrations
- Increasing health
conscious

- Little international
presence
-Increasing rental
expenses
they still have pricy while
the growth of organic
food industry are
increasing and also have
low price
The target group is quite
specific
Spend much less than
other supermarkets on
advertising, just word of
- Increasing
mouth
to
Whole
food just focus on
Competition
the
expansion strategy
- Stringent

KEY TO SUCCESS

focuses on earning a profit while providing


job security to its workforce to lay the
foundation for future growth

Foods, Whole People, Whole Planetemphasizes that our vision reaches far

eing a food retailer. Our success in fulfilling our vision is measured by customer
Team Member excellence and happiness, return on capital investment, improvement in the
nvironment, and local and larger community support.

Compelling economic
value added model:
The company is famous
and successful
for its conscious
capitalism and triple
bottom line approach

Products positioned to
increase market share:
Private label 365 organic
brand has been growing
revenue rapidly
Expanding
addressable
market for
products or
services:
Organic food is
fastest growing
food market in
Brandable products and services: maybe the most prestigious
brand in
the world
the supermarket business
Pure growth
companies are
able to grow in
all economic
Significant insider
environments
ownership: CEO is paid
: WFMI grew
Exposure
to
emerging
$1 dollar per year, all
revenue
markets: expects to
compensation tied to the
throughout
grow
its
market
stock, similar model for
recession