Case Study: 365 By Whole Foods

I do not believe that Whole Foods can avoid the pricing element of the marketing mix forever, because as it continues to grow, if it wants to maintain the same quality of food that it currently has, it may lead to increase in expenses which could lead to an increase in prices. While consumers may want to shop at a store that it feels is being socially responsible, eventually, the impact on their income may force them to look at other alternatives. The alternatives for consumers could be mainstream grocery stores or other smaller stores that looking to entering the marketing using the blueprint that was created by Whole Foods. In my opinion, I believe that while Whole Foods niche market would avoid Wal-Mart because of the numerous issues that it may have with the store, that same niche market may consider another grocer such as Safeway who may offer products at a lower price.

Whole Foods, just like any other retailer right now, has been struggling with the economy. The external environment has been changing in uphill and downhill motions daily, something that Whole Foods has never experienced before. Not only is there pressure on the financials of the corporation, but also there is the pressure to go green.

It’s amazing to me how quickly Whole Foods managed to spread around the Chicago land area. The one constructed on DePaul’s campus was the second one to have opened in 2015 with five more opening within the year to come. I had never personally shopped there before, but my heady friends told me that its produce was fresher than the all the other supermarkets in the city. At the time I lived up in Albany Park, and I never thought the produce at the grocery stores wasn’t fresh, I was just never able to go grocery shopping when they were open because I was working four jobs and taking six classes.

In technological factor and sociocultural factor, as grocery delivery should become a new trend, Whole Foods also respond to this by applying online grocery shopping even though they are a little slow responder compared to their competitors. Whole Foods appears to have the ideal customer base which can benefit from such a service as its shoppers tend to be high-income, urban, and willing to spend a few extra dollars to save time. This could benefit Whole Foods if they can figure the aggressive and effective way to develop this. The most successful new promotion may be its digital coupons, a program that was launched on January 28th. Daily downloads of the Whole Foods app jumped up to 5 times in the period after the coupons were introduced.

Whole Foods Market, Inc. has long been admired as an innovative company with quality standards, a devotion to community and environmental responsiveness, a healthy growth model and highly-regarded employment practices. However, the company has faced recent difficulties as a result of the economic recession, increasing competition, and complications from acquisitions. To revitalize the company from historical lows in its toughest year in history, Whole Foods Market must reassess its costs, refocus its expansion strategies, and promote its brand to compete for the diminishing consumer spending dollar.

Consumers view Whole Foods Markets as being very expensive and have given the retailer the nickname “Whole Paycheck”. Whole Foods carries a wider variety of organic foods and healthier brands besides their private brands. Whole Foods is experiencing a decline in sales due to other stores; like Wal-Mart, who are stocking organic foods at much lower prices; which has decreased differentiation (Lutz, 2014). Its decentralized business model decreases efficiency in procurement, distribution, and marketing efforts.

Whole Foods has become the world’s largest retail chain of natural and organic foods supermarkets. Not only is their focus to transform the way consumers look at food and its natural benefits, Whole Foods is looking to make a difference in the world with their products. Whole Foods appears to be in a rapidly growing market. Whole Foods has worked hard to set their products apart from other grocery retail chains and while their prices might still be considered high across the board, their products are geared towards a more health conscious individual who is willing to pay more for a healthier product.

Whole Foods is a supermarket that has successfully become the leader in the organic food segment of the grocery industry. While traditional markets have low brand loyalty and recognition, Whole Foods has focused almost entirely on its brand image, causing their strategy to be one of differentiation over cost leadership. Whole Foods is known as being far more expensive than other chains, due to this brand recognition. In their press release for the Q4 2014 results, they describe their vision and sum up what helps them develop that brand recognition. “We hold the idea of “food” to a higher standard, banning more than 75 ingredients commonly found in other stores, and we believe our unparalleled quality standards

Whole Foods continues to grow as the leader in organic and natural grocery supplier in the United States, Canada, and England. The company has continued to open new stores in new markets, as well as, opening two 365 by Whole Foods Market stores. Whole Foods became the industry leader by providing high quality natural and organic food products for consumers, which is a better and healthier product for consumers to consume. This is a big part of their competitive advantage. Other grocery stores are limited in their organic supplies, where as at Whole Foods, it is the primary focus. Another comparison is that with the help of Instacart, Whole foods is now the leader when it comes to delivery of fresh groceries then any other grocery in the industry. (Quarterly Results)

Whole Foods recent launch of their new stores, 365 by Whole Foods Market, is a way of trying to take a stab at Trader Joe’s niche. The one way Trader Joe’s has fought back was by lowering their prices. With other competitors joining the ranks of the organic food market, Trader Joe’s may be thinking ahead with other strategies, and may be in for a good fight as others want to duplicate their

Whole Foods Market was founded 1980 in Austin, Texas by three businessmen who felt that the natural food industry was ready for a supermarket setup. Two separate individual companies, Safer Way Natural Foods and Clarksville Natural Grocery, formed Whole Foods Market. After 27 years of operation, the company has come a long way. Today Whole Foods Market is the leading retailer of natural and organic foods, with 194 stores/locations in the United States, Great Britain, and Canada (wholefoodsmarket.com). The company has been in the Fortune Magazine's "100 Best Companies to Work for" every year since the list was made up in 1998 (2007 ranked 5th). The cofounder and CEO, John

Whole Foods Market carries out a series of operations but its main function is to supply customers with healthy and mostly organic foods. The company takes on an organic/natural version of a grocery store whose mission is to supply consumers with superior quality food. Although some products do contain GMO ingredients, the company makes sure these products are properly labeled to the public. This is why the company has grown rapidly with the rising concern of what we put in our bodies. One of the biggest trends in America today is eating healthy and organic foods.

Whole Foods has been adaptive in fitting its competitive strategy to its situation. The store first grew to prominence by being a stylish antithesis to the crunchy mom-and-pop organic grocery stores, providing a relatively normal but

Marketed as ‘America’s healthiest grocery store’ the company has successfully grown to 408 stores across the world with sales of $14 billion in 2014 (Whole Foods Market, 2015). The firm is positioned as an upmarket grocery due to the emphasis on natural, organic origins, and as a result are able to charge a premium for their products. Through efficiently running its operations and stores, Whole Foods are able to maintain healthy 4.02% profit margins (Financial Times, 2015) and operating margins well above the American grocery store industry average at 6.58% (Bloomberg, 2015). Looking at 2015’s quarter 1 figures it is clear to see that Whole Foods have had a hugely successful year with sales of $4.7 billion, up 10% from the same period last year. Furthermore, they opened 9 new stores and have signed a further 11 new leases.

Whole Foods Market began in 1970 as a local supermarket. Over the past 31 years, Whole Foods Market has grown from a single store in Austin, Texas, to becoming one of the worldwide leaders in providing consumers with natural and organic foods. They have grown to over 300 stores in both North America and the United Kingdom. (Whole Foods Market, Inc., 2011) This report examines the chief elements of the strategy that Whole Foods Market has put into place. Also, it uses past financial data to provide an assessment of the condition of the company going forward. Those assessments include recommendations of future actions, along with concerns I have about the way the company is currently operating and some difficulties that may be on the way.