The Company Whole Foods Market

Whole Foods Market’s first retail location was in Austin, Texas. Today there are 342 stores in the United States, Canada and the United Kingdom. The growth of this health conscious conglomerate happened over the years by strategic acquisitions of profitable independent stores throughout United States. Mackey’s idealism and respect is exhibited in his openness about the contributions of these retailers to the success of WFM, as the website provides an in depth summary of each acquisition and its contribution to promoting healthier food choices (Whole Foods Market History, 2014). After four years in Austin, Texas WFM branched out into the city of Houston when it purchased the Whole Foods Company, and shortly after, on the west coast, a new store was built in Palo Alto, California. Subsequently WFM began aggressive acquisitions over the next few years, which help to accelerate the growth rate of WFM in other geographical locations. In 2002 WFM opened in Canada and in 2004 through the acquisition of United Kingdom’s grocery chain Fresh & Wild, it opened seven stores. Holistic eating is a worldwide affair that WFM is taking advantage

It was a huge hit because there are less than six organic grocery stores in the nation. Knowing his vision well, John Mackey, the main founder put his dream into action. He used his ability as a connector, someone who has broad social network, to integrate others people’s ideas. Soon, expansion came to place starting from Dallas to New Orleans. In order to guarantee each store’s success, he did thorough research on social class, eating habit, and supply and demand. He took his action deliberately.

In 1978, John Mackey and Renee Lawson borrowed $45,000 from family and friends to open a small natural foods store called SaferWay in Austin. Two years later, Mackey partnered with Craig Weller and Mark Skiles to merge SaferWay with the latter’s Clarksville Natural Grocery, resulting in the opening of the original Whole Foods Market (WFM). Since then, WFM has expanded to 466 stores in the U.S., Canada, and the United Kingdom, averaging over nine million customer visits each week. “The company has always represented the highest quality, selection and service while still offering prices customers are willing to pay on premium products”. (Whole Foods Market,

These conflicts exist in the demographics served by Whole Foods – the elite and well to do. If Mackey is a conscious capitalist and servant leader and practices what he preaches he would have stores which are accessible to persons of all demographics. This has been the main complaint against Mackey and the one which the potential to damage his credibility as a servant leader and conscious capitalist and thus the good work of his legacy. Recently Mackey acknowledged the weakness of his legacy this and answered the call to provide good food for people of all incomes be creating Whole Food’s Market 365 stores, which only sell the stores brand. The 365 stores will have price points which are easily affordable to persons of middle and lower income (Kowitt,

Whole Foods’ incredible rise over the past 34 years serves as evidence of their considerable ability to create a strategy and successfully execute it. Whole Foods differentiated itself by becoming the first Certified Organic grocer in the United States (1) and has stuck to the strategy of selling consumers organic and natural products. The successful execution of this strategy has allowed them to charge a premium for their products giving them higher net margins than nearly all of their competitors. (2) Their ability to earn such premiums has attracted the attention of industry incumbents who are now attempting to lure the increasingly health-conscious consumer with their own expanded offerings of organic and natural foods. For Whole Foods Market to retain their ability to earn such impressive premiums and sustain their growth they will have to execute on their strategy with even greater precision. “No firm can succeed for long without an intense focus on execution. Average executors are average performers, and poor executors risk decline and failure.” (3)

Whole Foods Market Inc. is an American supermarket chain specializing in organic food that opened on Sept. 20, 1980, in Austin, Texas, its current headquarters. Whole Foods Market Inc. has 431 supermarkets among the United States, Canada, District of Columbia, and the United Kingdom. Whole Foods Market has sales revenue of 15.39 billion, total assets of 5.74 billion, and a net income of 536 million in the annual report of September 2015. Whole Foods Market’s common stock is traded on the NASDAQ Global Select Market under ticker symbol “WFM”. Whole Foods Market’s primary products are organic and natural food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy products. Whole Foods Market Inc. is in the retail supermarket and grocery store industry, in which makes up the largest food retail channel in the United States. The Supermarkets and Grocery Stores industry faces a high amount of internal and external competition, particularly from large retailers like massive warehouse stores and supercenters. The barriers to entry in this industry are the medium range, but are increasing.

Whole Foods Market, incorporated on August 15, 1980, is the world’s leading retailer of natural and organic foods and America’s first national “Certified Organic” grocer. Since 2012, Whole Foods Market operated 335 stores in the United States, Canada, and the United Kingdom. Depend on 2011 sales rankings from Progressive Grocer, Whole Foods Market became the largest retailer of natural and organic foods in the U.S. and the 11th largest food retailer overall. Today Whole Foods Market consists of 32000 employees and owns stores average 38,000 square feet in size and 10 years in age, and the scale of Whole Foods Market is continue growing through mergers, acquisitions and new store opening

Figure 9: Prices of Various Items as per Retailer on Prime Day (Howe 1). The above figure shows that Wal-Mart’s price leadership is an essential concept that has led it to where it is. The relatively low prices that the company offers relative to other organizations has played a significant role in making her products affordable and available to people. As a result of this, the company has been able to gain a competitive edge that has placed it at the forefront as one of the most profitable retailers in the U.S and around the globe, through the years.

Currently, WMF is facing a problem with perception and reputation. They are perceived as a high-end grocery store that takes your “Whole Paycheck.”(Newsmax) Recently, Whole Foods Market has been investigated for routinely overstating

When 7-Eleven markets arrived in Los Angeles, Joe Coulombe understood that his chain of convenience stores would not survive. Hence, he wanted to come up with a different approach in the food stores. As a result, he spent some quite time traveling and working out some ideas for a new kind of grocery retailer. In addition, while admitting that he was not aiming for perfection, he came up with an idea that for Traders Joe’s and designed it for people who were overeducated but underpaid. The main goal was to make it possible every night to have a decent bottle of wine, as well as, a decent loaf of bread, as well as, a decent pound of cheese

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.

The reasons why the Whole Foods Market has grown over the years is that it has a very ambidextrous organizational structure, wherein it imbibes both mechanistic and organic structures. As the CEO of the company points out that, the store workers do not have to wait for their managers to make the decisions

On a better note, WFM does an excellent job on designing the interior of their stores so the customers and employees feel at home. Not only does the interior set up make you feel at home but it also exquisitely displays all of its products so that the customer is interested enough to at least check it out. Finally, WFM strives to encourage and teach people about organic foods and the positive effects it has for the consumer and the environment.

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.

For three decades it has dominated the organic foods market, becoming known for its high quality foods. The market dominance and strategic store locations made it possible for WFM to charge more than other food stores and still make huge profits. The company had its first true test though when the global financial crisis hit in 2007-08. Many people began to abandon Whole Foods for cheaper chain stores and their stocks took a big hit. They rebounded with the economy but it was the first time expansion had stalled. Another more gradual threat emerged and that was other grocery stores venturing into the organic foods market. These companies saw the success WFM was having with its organic products and began incorporating more and more organic/responsibly made foods at lower prices.