Whole Foods Executive Summary

Whole Foods Market is one of the biggest organic and natural whole food suppliers in the world. They provide a wide variety of select foods that are without hormones or antibiotics and are stamped with the U.S. Department of Agriculture’s stamp of approval. They value the fact that they can provide people with access to healthy food and be identified with being socially and environmentally responsible.

Whole Foods will need to research and figure out marketing strategies to keep the customers loyal to Whole Foods. One of the main reasons customers will go to different supermarkets that have organic foods is because of the different department stores inside the grocery market. For instance, some grocery stores sell organic vegetables, but also have regular vegetables. Some of the larger grocery stores have banks, photo stores, insurance companies that make your stop at the larger grocery store

On averaged their stores are roughly 38,000 square feet and their locations typically carried 21,000 SKUs. They make two-thirds of its revenue by selling bakery, perishable items, and prepared foods. (Ager & Roberto, 2014). Peoples tend to shop at Whole Food Market because of their high-quality natural and organic food. In today’s world peoples are more concern about health concise and effect of pesticide products, more people choose to have organic fruits and vegetables. Whole Foods get most of their produces from local people which are natural and organic, which will help them gain more customer than other company because of increasing demand of organic food (Whole Foods Market History, n.d). They also have a strong brand image and they were the first supermarket who commit to completely eliminating disposable plastic grocery bags to help protect the environment. They also sell many USDA-certified organic

Whole Foods Market believes that the operation of a company should exceed beyond profits and focus on creating values and relationships within their communities. Whole Foods Market is “currently the 8th largest public food and drug retailer in the U.S., ranking #232 on the Fortune 500” (Whole Foods Market Annual Report, 2013). Food retailing has gained more competiveness over the years. Whole Foods Market, has been awarded, “America’s Healthiest Grocery Store.” Whole Foods Market’s “seek out the finest natural and organic foods available, maintain the strictest quality standards in the industry, and have an unshakeable commitment to sustainable agriculture” (Whole Foods Market Company Info, 2014). They believe that providing customers with natural and organic products, they are giving customers the most nutritious food and the best tasty food as well. “The quality of their foods is measured by nutrition, freshness, appearance, and taste” (Whole Foods Market Company Info, 2014).

1. Whole Foods philosophy states a value in education and an informed society. They market themselves to a buyer with a slightly higher income and education level because they feel that these people are more conscious of their overall health. The demographics of an area guide’s Whole Foods in the selection process of each location. They seek out highly dense, urban areas that have high foot traffic, where at least 40% of the residents have a college degree. 2. Overall demand for natural and organic products has increased and with that rise in demand, came a rise in competition. As a result of the competition, Whole foods became the first “Certified Organic” grocer by a third party inspector. As many of their competitors continued to follow the guidelines of the USDA’s Organic Rule, Whole Foods was willing to take the extra step to become certified and have their products authenticated. Their hope is to deter consumers from buying the competitor’s products that are not certified and may not even be labeled “USDA Organic.”

The Whole Food’s Mission is Whole Food, Whole People, Whole Planet. Whole Foods consist of the highest quality, least processed, most flavorful and naturally preserved foods available locally and grown from all over the world. Whole People result from empowering, the best people they can recruit, to make many operational decisions, creating a respectful workplace where team members are treated fairly and are highly motivated to succeed. Whole Planet is the belief that companies, like individuals, must assume their share of responsibility for our planet through supporting organic farming on a global basis. Whole Foods mission statement does an excellent job of describing their present situation and the purpose of the company going forward. Their mission statement identifies the company’s product being whole foods, specifies the buyer needs that they are seeking to satisfy, and it gives the company their own identity by separating them from the other natural and organic grocers through environmental stewardship.

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

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

Sustain a competitive advantage as the largest organic supermarket corporation through continuing growth in the number of partnerships Whole Foods has with producers, buyers, and retailers to create shared value.

Due to new entrants in the competitions for natural and organic food, companies take on adjustment strategies in order to satisfy the increase in demand and supply and maximize profit. In 2015, Whole foods failed to satisfy the companies’ projection of 6% growth and due to “selling, general and administrative expenses suffered a fall in its net profit by 56% compared to 2014 fourth quarter” (Bells, 2015). The downfall was mainly caused by increase in total cost due to operational expenses “rose from ~29% in Q4 2014 to ~32% of the total revenue in Q4 2015” (Belle, 2015). In 2016 the company takes on newly developed strategies in order to lower the cost of production and expense and raise its gross margin percentage, which also dropped in Q4 2014 “by almost one whole point to 34.5%” (Bells, 2015).

The main cost reduction strategy that had been suggested by Whole Food Company is the reduction of 1,500 jobs as of 2015 (Kowitt, 2015). This decision was made because the company had been under intense scrutiny from the other organic and natural food competitors. As such the company is planning to reduce the prices of their commodities. To realize more profits under reduced prices means that the company should cut down the costs. Salary costs are the main expense that cuts down the profit margins of the company and so is the decision to reduce the

Fortune 500, 2012 ranks Whole Foods Market as the 264th best company in the United States, and Fortune 100, 2012 ranks Whole Foods as the 32nd best company to work for. Whole Foods Market is a global leader in the natural and organic foods. The company operates within the natural and organic segment, which include seafood, meat, poultry, bakery and grocery. The company also prepares specialty food such as wine, coffee, vitamins, nutritional supplement and body care. Whole Foods Market also produces educational products such as books, and other products such as pet products, floral, and household products. In September 2010, the company has 299 stores in the United States, Canada and the UK. The rapid growth of Whole Foods Market has been attributed to the selective products that the company offers and its dedication to the quality standard. The company was formed in 1980 and completed its public offering in 1992. The Whole Foods Market is dedicated to promote wellbeing of all people by supplying high quality and wholesome food. Whole Food's mission statement is to "promote vitality and well-being for all individuals by offering the highest quality, least processed, most flavorful natural and naturally preserved foods available."( Meador 2010, P 1). Whole Food strategy is to open large new stores measured 50,000 square feet or larger. The company also dedicates in acquiring small chain

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 has expanded by a mixture of opening its own new stores and acquiring already existing stores. Today WFM does not follow this strategy, instead their motivation is to open its own large stores. This is due to noticeable sales differences in larger stores as opposed to smaller stores. WFM locates these newer stores in upscale areas of urban metropolitan centers and high-traffic shopping locations. Not all WFMs are isolated structures; some are located in strip malls. WFM offers a larger selection of natural and organic foods than any other grocery store. WFMs marketing expenditure is extremely small. They spend a measly 0.5% of their revenues on advertising. Their chief marketing strategy relies on word-of-mouth. WFM strives to meet or exceed customer expectations. This is so customers receive competent, knowledgeable, and friendly service and become advocates of WFM. The employees here have a decentralized team approach for store operations. This is so some personnel, merchandising, and operating

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.