COMPANY BACKGROUND
Whole Foods Market was founded in Austin, Texas, when four local businesspeople decided the
natural foods industry was ready for a supermarket format. Their founders were John Mackey and
Renee Lawson Hardy, owners of Safer Way Natural Foods, and Craig Weller and Mark Skiles, owners of
Clarksville Natural Grocery. The original Whole Foods Market opened in 1980 with a staff of only 19
people. It was an immediate success. At the time, there were less than half a dozen natural food
supermarkets in the United States. It has grown in leaps and bounds since then. Today, they are the
world’s leader in natural and organic foods, with more than 310 stores in the North America and the
United Kingdom (About Whole Foods Market). During its 31-year history, Whole Foods Market has been
a leader in the natural and organic food movement across the United States, helping the industry gain
acceptance among growing numbers of consumer concerned about the food they eat (Thompson,
Strickland, & Gamble, 2010, p.C-2). The company seeks out the finest natural and organic foods
available, maintains the strictest quality standards in the industry, and has an unshakeable commitment
to sustainable agriculture. Add that to the excitement and fun they bring to shopping for groceries, and
you start to get a sense of what they are all about.
John Mackey, the company’s cofounder and CEO, believes that Whole Foods’ rapid growth and
market success has much to do with its having “remained a uniquely mission-driven company—highly
selective about what we sell, dedicated to our core values and stringent quality standards and
committed to sustainable agriculture” (Thompson, et al., 2010, p.C-2). Mackey’s vision was for Whole
Foods to become an international brand synonymous not just with natural and organic foods but also
with being the best food retailer in every community in which Whole Foods stores were located. He
wanted Whole Foods Market to set the standard for excellence in food retailing. Mackey’s philosophy
was that marketing high-quality natural and organic foods to more and more communities would over
time gradually transform the diets of individuals in a manner that would help them live longer, healthier,
more pleasurable lives. They often talk of their mission in terms of “Whole Foods, Whole People, Whole
Planet.”
Whole Foods: This means that the company searches for the highest quality, least
processed, most flavorful and natural foods possible because they believe that food in its
purest state—unadulterated by artificial additives, sweeteners, colorings and preservatives—is
the best tasting and most nutritious food there is.
Whole People: They see people as their company. Their employees are passionate about
healthy food and a healthy planet. Employees also take full advantage of Whole Foods’
decentralized, self-directed team culture and create a respectful workplace where people
are treated fairly and are highly motivated to succeed.
Whole Planet: The company is committed to helping take care of the world around us, and
their active support of organic farming and sustainable agriculture helps protect the planet.
And while they assist global neighbors through their Whole Planet Foundation micro-lending
operations, they also step out the back door of each store to support food banks, sponsor
neighborhood events and donate to local non-profit groups (About Whole Foods Market).
The following list of core values reflects what is truly important to Whole Foods as an
organization. These are not values that change from time to time, situation to situation to person to
person, but rather they are the underpinning of their company culture. Many people feel Whole Foods
Market is an exciting company to be a part of and a very special place to work. By maintaining these
core values, regardless of how large a company Whole Foods Market becomes, the company feels they
can preserve what has always been special and unique to their atmosphere. The following is a list of
their core values (Our Core Values):

Selling the highest quality natural and organic products available

Satisfying and Delighting their customers

Supporting team member happiness and excellence

Creating wealth through profits and growth

Caring about their communities and the environment

Creating ongoing win-win partnerships with their suppliers

Promoting the health of their stakeholders through health eating education
HIGHLIGHTS ON WHOLE FOODS
In February 2007 Whole Foods acquired its largest competitor at the time. Whole Foods signed a
definitive merger agreement with Wild Oats Markets. Whole Foods would acquire Wild Oats Markets’
outstanding common stock in a cash tender offer of $18.50 per share. Whole Foods spent $565 million
for the merger and had to pay off Wild Oats’ debt of $106 million. This merger allowed for Whole Foods
to increase its operations to over 300 locations and operate in 30 states. Whole Foods also acquired
stores in Canada and in the United Kingdom, allowing them to further expand their company
internationally. At the time Wild Oats was operating 110 stores with annual sales of $1.2 billion
compared to Whole Foods who had 193 stores and net sales of $5.6 billion.
The merger worked out both for Whole Foods and for Wild Oats. Wild Oats was
underperforming and was in transition period of operating without a CEO or CFO. Both of these
situations are signs of a needed change. John Mackey, Whole Foods CEO, called the acquisition “highly
opportunistic.” Mackey went on to say the timing was right to approach Wild Oats about a merger given
the “strategic gap” at Wild Oats as evidence by the lack of a CEO and lack of a clear company vision
(Whole Foods Acquires Wild Oats).
One of the biggest challenges that Whole Foods faces is its inability to open new locations. By
merging with Wild Oats, Whole Foods has a stronger presence in the Rocky Mountains, Pacific
Northwest, and Florida. These new acquired stores allows for Whole Foods to have new locations. It also
gives Whole Foods the benefit of operating in these three regions; these three regions were where
Whole Foods lacked presence. Now that Whole Foods is able to have a better presence in these regions
it will allow for Whole Foods to continue increasing the amount of stores Whole Foods has.
Another important event that happened to Whole Foods was in 2001. Whole foods acquired
most of Harry’s Farmers Market Inc.’s assets for $35 million. Whole Foods at the time had current assets
totaling $144.7 million. This acquisition increased Whole Foods total assets by about 24%, a very
significant increase (Whole Foods Market Acquires Harry’s Farmers Market Stores). Whole Foods
received three perishable superstores, a distribution center, commissary kitchen, a bake house, and
office facilities. This acquisition in 2001 allowed Whole Foods the opportunity to continue increasing its
company. This acquisition gave Whole Foods presence in Georgia by having stores, a distribution center,
a bake house, and office facilities. This allows Whole Foods to be able to operate in the southern United
States and continue supplying and opening new stores.
WHAT SHOULD HAVE SPECIAL EMPHASIS
After researching the industry and Whole Foods as a company the area that should have special
emphasis would be the opportunity to continue increasing. With today’s views and motivations,
consumers are looking for products and changes that will allow for them to become more
environmentally friendly. This is an ongoing view that many consumers are following. Companies, like
Whole foods, need to continue to increase their product line, open new stores, increase awareness, and
continue increasing internationally. A company that is viewed by consumers as an environmentally
friendly place and has the best nutritional products has a great opportunity to be successful. Whole
Foods cannot afford to let its competitors or larger companies, such as Wal-Mart or Kroger, to get a step
ahead in this industry. Whole Foods needs to be the leader and not the follower. Going green is an
international motto that many consumers and countries are trying to move towards. Companies that
can reflect this motto give their consumers more confidence in purchasing their products.
WHOLE FOODS MARKET IN 2008 CASE STUDY QUESTIONS
1) Strategic Market ConditionWhole 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. This idea is
portrayed through their motto, “Whole Food, Whole People, Whole World”. Since emerging into the
retail market in 1991, Whole Foods has continued to push through the skepticism and hardships to
emerge as one of the leaders in natural and organic food retail. Currently, 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.
Through their acquisition of Wild Oats Market and new Whole Foods stores popping up everywhere,
especially in metropolitan areas, Whole Foods have been hard at work to make themselves present in
the food retail industry.
In order to compete in this market, Whole Foods will have to stay true to their roots as far as
only offering natural and organic foods. Many grocery chains have ignored the growing demands of
consumers for healthier foods over the years, and Whole Foods has to capitalize on these increasing
demands. While their prices are higher, the lifestyles of consumers are changing to one which is more
health conscious and many consumers have said they’re willing to pay more for a healthier product.
With this recent shift in consumer lifestyles, Whole Foods is one step ahead of many of the other
grocery retailers in the industry and this gives them the competitive edge they need to stay a leader in
the market. Whole Foods needs to increase the number of stores that they have throughout the country
and work on expanding their product line to as many natural and organic products as they can manage
within their stores. Many grocery retail stores such as Kroger’s and Giant Eagle have noticed the trends
in consumer demands changing rapidly and are working hard to adapt the natural and organic lines of
food within their stores, but they are just emerging into the market. Whole Foods will need to stay
ahead of their competitors when it comes to the products they offer and establish a strong consumer
base. With these other retailers jumping onto the natural and organic bandwagon, the prices of these
products will begin decreasing and consumers will have more options as to where to shop and get the
same products, so Whole Foods must work hard now while they’re growing to attract a steady customer
backing so when this market hits its mature stage, which it will once all of these other retailers establish
a natural and organic brand of their own, Whole Foods doesn’t have to focus on attracting customers to
keep their head above water. Instead, they can look ahead to what is next for Whole Foods in their
expansion of stores and product line.
2) Chief Elements of Strategy and Generic Strategy EmployingAfter looking through the Whole Foods Case and taking a more in depth approach at evaluating
their operations, competitors, and market as a whole, it appears that Whole Foods is operating under a
focused differentiation competitive strategy. Some of the reasons for thinking this are…

“A narrow market niche where buyers needs and preferences are distinctively different”
The market that Whole Foods is going after with their product line is specifically those
consumers who are looking for organic/natural foods. They only sell these types of
items which allows them to focus solely on the needs and demands of this small market group.

“Attributes that appeal specifically to the tastes and requirements of niche members”
Unlike their competitors, Whole Foods sells strictly natural and organic products that meet the
desires of the developing organic market. They aren’t worried about attracting all grocery
consumers to their store by offering a wide variety of food products; they focus on organic and
natural foods only.

“Features and attributes tailored to the tastes and requirements of niche members”
Because Whole Foods only offers organic and natural food product lines, they are meeting the
growing demands of the consumer market which has begun the shift towards organic and
healthier foods. Since they’re offering the specific products that not many of their competitors
are offering, Whole Foods is able to charge a higher price that consumers are still willing to pay
because the demand for the product is so high while the supply is so low.

“Stay committed to serving the niche better than rivals; don’t blur the firm’s image by
entering other market segments or adding other products to widen market appeal”
Even though Whole Foods has gone about acquiring other companies and making business deals
and propositions to better their company as a whole, Whole Foods has shown no interest in
entering any other market segments besides that of the natural and organic food line. They
want to stay focused and committed to offering their consumers the highest quality product
while continuing to try and lower prices and make other consumers aware of the benefits of
eating healthier foods such as the ones sold at Whole Foods.
3) Well Matched Strategy
The strategy that Whole Foods has put into action is one of making change happen throughout
the world, in all of the places that they are able to establish a store location. While their strategy does
revolve around making a profit, their overall strategy is about creating a healthier world, through what
consumers are eating and how our decisions are affecting the world. Right now, the natural and organic
food segment of the food retailing industry is in a period of growth and change which really creates a
great match between Whole Foods and the industry segment itself. Although Whole Foods has been
around for a while, because they are distributing a product that very few consumers are demanding,
they are just now reaching a point of rapid growth as an organization. With the “go green” and “be
healthy” society pressures that are really becoming strong forces in day to day life, the organic and
natural food segment is really beginning to take off. Both the strategy and the segment that Whole
Foods is in are experiencing a time of rapid developments, high numbers of competitors trying to enter
into the market, and growing consumer demand which makes they strategy they are currently
employing a great fit to the current conditions they are facing within the industry.
4) SWOT Analysis
When looking at Whole Foods and their industry, the true driving force at work is the growing
demand of a small target niche desiring organic and natural food products. Organic and natural products
have been around for quite some time however they were considered a high-end food product due to
the simple fact that they are more expensive than normal food and produce. This growing demand is
going to benefit the competitive structure favorably because it will create more competitive energy and
dynamics within the organic/natural segment. A SWOT Analysis of Whole Foods shows that they are
currently in a very stable place due to their strong brand name, broad product knowledge, and high
employee satisfaction. Whole Foods has ample opportunities with minimal and controllable threats and
weaknesses. The following SWOT Analysis information shows the top points in each of the sections
within the SWOT and the full SWOT Analysis conducted can be found in Figure ().
Strengths
-
Broad product offerings wide selection/variety with over 30,000 items offered.
-
Nationally known as organic/natural food seller The environmental protection agency of
United States has given it third place at the list of its 25 green power partners (Whole Foods
SWOT Analysis)
-
High employee retention no unions, above average hourly salary, solid benefits, 401K for
workers
Weaknesses
-
Higher priced products
75% higher priced products compared equivalent non-organic products
Opportunities
-
Increase demand for organic products
Hype right now is to eat healthier and protect the environment “Go Green” movement
continues to increase within society
Threats
-
Intense competition may have adverse effect on profitability
Large competitors are adapting Go Green movement as well (Wal-Mart, Kroger, and
Costco)
-
Local farmers markets/independent retail chains can offer same products and offer lower
prices without going through the manufacturer
5) John Mackey’s Strategic Vision
Whole Foods has a strong foundation on the words of their leader (CEO) John Mackey who
initially wanted to open and develop Whole Foods into not only the best food retailer (in which Whole
Foods was located), but to change the diets of individuals to help them live longer and healthier lives.
Mackey developed the core values that employees of the Whole Foods organization follow each and
every day and emphasized the importance of recognizing their ultimate goal, “Whole Foods, Whole
People, Whole Planet”. Mackey had a great strategic vision for Whole Foods because he wasn’t
narrowing his focus on the financial success of the company; he was genuinely looking out for the wellbeing of his potential consumer base which should be at the core of every retailer out there. When you
look at Whole Foods’ motto, “Whole Foods, Whole People, Whole World,” it creates a huge window of
opportunities for the future of the company. This motto focuses on the three core elements that can
make any business successful, by focusing on the product, consumers, and expansion opportunities.
What we like about this motto is that it is short and sweet but yet packs so much meaning to the
operations of the company. Whole Foods doesn’t just use this motto to make themselves look or sound
pretty, they run their company based on the words and principles associated with each of these six
words. For Whole Foods, their motto is more than just a pledge to the industry about what to expect
from their operations, it is a promise to employees and consumers that Whole Foods will not be
satisfied until they are able to provide healthy food to everyone, everywhere.
6) Do Core Values Really Matter?
When you look at the list of core values for Whole Foods, it is easy to see how vital each and
every one of them is to the company as a whole. Before diving into explaining what exactly their core
values are, Whole Foods takes the time to explain exactly what role the core values have to their
organization. They say, “The following list of core values reflects what is truly important to us as an
organization. These are not values that change from time to time, situation to situation or person to
person, but rather they are the underpinning of our company culture. Many people feel Whole Foods
Market is an exciting company of which to be a part and a very special place to work. These core values
are the primary reasons for this feeling, and they transcend our size and our growth rate. By maintaining
these core values, regardless of how large a company Whole Foods Market becomes, we can preserve
what has always been special about our company. These core values are the soul of our company.”
(WHOLE FOODS’ WEBSITE) The core values that Whole Foods proudly displays throughout their stores
and websites are not just an accessory to try and gain consumer appeal; they are the backbone of every
decision and operation that take place within the company. It is easy to see that Whole Foods’ core
values contributed to the company’s success because they lay out what steps it takes not only for Whole
Foods to be successful within the industry (from picking out the right product to reaching out to
consumers) but also how to be successful in the communities and environment that they are operating
in. By essentially developing the guidelines for how a company should be run through the core values,
Whole Foods was able to develop a strategic guideline for management and all of their employees to
follow in order to promote competitive success.
7) Whole Foods’ Financial Performance
*use slide show values*
8) Whole Foods’ Strategic Performance
From a strategic perspective, Whole Foods is on the fast track to a very successful company
within the organic retail industry. Whole Foods’ strategy is a restatement of their company motto,
“Whole Foods, Whole People, Whole Planet” and they measure their strategic success through
customer satisfaction, team member happiness, return on capital, and their ability to improve the
current condition of the environment around them. The strategy of Whole Foods targets each of their
competitive advantage opportunities within the organic industry. Because they are one of the first and
biggest retailers in the organic industry, it is important that they capitalize on the growing consumer
market while also staying true to their initial goals of creating an overall healthier environment. The
company does have a winning strategy because it allows them to be successful in more than one area.
Whole Foods has spread out their operations to not only providing the best product to their consumers,
they are also trying to raise awareness to healthier eating habits while trying to promote and support
the “go green” initiative. While some say that their strategy is too open ended and not focused enough
on the future of the organization, it is hard to really establish a set in stone strategy for the market and
industry that Whole Foods finds themselves in. The organic market is rapidly emerging into the grocery
retail industry, and Whole Foods is riding the exciting wave as organic products become more popular
amongst consumers. The strategy that Whole Foods is following is a great strategy for them because it
allows them to focus on the product, the people, and the environment which is what Mackey wanted
from the beginning while creating room for future successes.
9) Weighted Competitive Strength Analysis
When you look at a competitive strength analysis of Whole Foods and their closest competitors,
Whole Foods has a competitive advantage within the industry. The key success factors that were looked
at in this analysis were overall size of stores, price of products, organic knowledge, reputation/image,
customer loyalty/retention, variety of organic products, and distribution capabilities. Whole Foods has a
competitive advantage amongst their competitors in organic knowledge and variety of organic products.
When you look at the competitive strength analysis, you’ll see that Whole Foods is followed very closely
behind by Trader Joe’s (who is second in each of Whole Foods’ competitive strengths). While these two
competitors are close in their competitive strengths, Whole Foods has a slightly higher advantage over
Trader Joe’s due to their store sizes and store locations. When you talk about organic retail stores, many
people have never heard of Trader Joe’s due to lack of expansion with their stores which is where Whole
Foods has been able to capitalize on becoming the leader within the industry. In order to maintain this
advantage, Whole Foods really needs to focus on lowering their product prices. Many people consider
organic foods to be a specialty or high-end item because they assume it is going to be so much more
expensive, but if Whole Foods is able to continue offering such a wide range of knowledge and products
in such a vast amount of locations at a lower price, they will have no problem maintaining their
competitive advantage within the organic products industry.
10) Acquiring Wild Oats Market
Ultimately by acquiring Wild Oats Market, Whole Foods was able to buy out their largest
competitor. The acquisition process didn’t go smoothly at first because many people feared that if
Whole Foods was able to buy Wild Oats Market, it could lead to a monopolization of the organic
industry however through much controversy, Whole Foods was able to acquire Wild Oats Market in late
August 2007 (CASE IN BOOK). With this acquisition, Whole Foods was able to enter a large number of
new consumer market areas as well as expand their product purchasing power which as a result majorly
boosted their sales. Whole Foods was really able to spread their name throughout the country with this
acquisition because they were entering areas that already had an organic consumer target market, and
then by satisfying the consumer’s needs, good word began to spread about this up and coming
company. Unfortunately with all of the success came some disappointing realizations. The biggest
negative that came from the acquisition of Wild Oats Market was the debt that came with the company.
Whole Foods was blindsided by all of the money that Wild Oats Market owed many suppliers,
businesses, banks, etc. and because of this, their financials took a major hit themselves. Even though
Whole Foods was now able to enter into all of these new areas to sell their product, any extra revenue
that they were making and then some was going towards paying off their newly acquired debt. When it
comes down to the acquisition of Wild Oats Market you really have to weigh your pros and cons
because there were definitely some strong support factors for each side and through the information in
the case and that we found researching into the company, we don’t approve of the acquisition of Wild
Oats Market. Even though they were able to quickly expand their operations into new regions and
introduce their organization to new consumer markets, the acquisition cost Whole Foods more than
what they gained. Whole Foods had a strong enough strategy that they didn’t need to acquire another
company; this decision seems to be a rash decision that wasn’t thoroughly thought out in hopes of
quickly gaining overall an overall competitive advantage within the industry. Considering the amount of
money not only that Whole Foods paid to acquire Wild Oats Market, but the amount it took to relieve all
the bad debts that came with the acquisition, Whole Foods came out on the short end of the stick with
this deal.
11) John Mackey’s Internet Postings
John Mackey found himself in some hot water when it came to his Yahoo! and blogging posts
that he did in regards to Wild Oats Market and the FTC’s investigation into the acquisition of Wild Oats
Market by Whole Foods. While it would be easy to jump to the conclusion that these actions were
borderline unethical but through the facts, Mackey’s actions appear to be more inappropriate and
unprofessional than anything else. The first of Mackey’s internet postings was a seven year span where
he posted over a thousand entries on the Yahoo Finance site promoting Whole Foods and at times
making comments about fellow competitor Wild Oats Market. These postings were made under an alias
name, Rahedeb in order to try and hide his true identity (Case in Book). When confronted about his
anonymous postings, Mackey said, “I posted on Yahoo! under a pseudonym because I had fun doing it. I
never intended for any of those postings to be identified with me” (Case from book). From what was
uncovered in the situation, it doesn’t appear that Mackey was intending to destroy the company or run
them into the ground; he was simply pulling the strings of a competitor to see what would happen. The
second controversy that Mackey found himself in was over a blog he posted on the Whole Food’s
website showing complete disgust with the way the FTC was interfering with the Whole Foods’
acquisition of Wild Oats Market. In this situation again, Mackey was voicing his opinion over a matter
that had direct effect on the company he had put his heart into and Mackey simply took it too far. Critics
of the Mackey blog posting said, “it was inappropriate for a CEO to publicly air the company’s position
on the matter” (Case in Book). All in all, Mackey’s actions were inappropriate for the leader of any
organization, but they were simply actions of voicing his opinion which keeps them from becoming
unethical. These incidents took place a few years ago, and at the time they occurred the Board of
Directors for Whole Foods investigated Mackey’s actions and complied with all requests from the FTC
and court systems in the investigations. The board really has no need to take any further action on these
past events, they simply need to ensure that everyone is on the same page and that something like this
doesn’t happen again.
12) Any Other Issues Whole Foods’ Management Should Address
A future challenge that Whole Foods is likely to face is that conventional grocery stores will
begin to over saturate the market and offer organic and natural foods. Whole Foods will face the burden
of convincing new customers to shop at their store instead of other more convenient stores. Whole
Foods will also have to be able to compete against the conventional grocery chains when it comes to
pricing. Whole Foods’ product line is often seen as more expensive than the conventional grocery chain.
Whole Foods has to decide whether they want to convince their consumer that the product that they
are receive is worth the price that they pay, or Whole Foods has to figure out a way to lower the cost of
the goods they offer. Another big challenge for Whole Foods is simply getting people in the door and
maintaining a loyal customer base.
13) Recommendations to John Mackey
We recommend that John Mackey stays proactive in the industry, instead of reactive. The best
bet to continue to stay successful with Whole Foods is to stay one step ahead of the competition. This
can attributed to in many ways. Revenue growth can be spurred through a marketing campaign and
community outreach. Investing in advertising can really help spread the Whole Foods brand name and
what they are really all about. The same is true for reaching out to the community; the company has a
better chance that the Whole Foods brand becomes a more household name and attracts new
customers. Retaining and increasing the customer loyal is going to be one of the most important things
for John Mackey to focus on. One recommendation would be to create a customer loyalty card that
provides discounts and incentives for people to come and purchase goods from Whole Foods. It’s
difficult to compete with the conventional grocery stores but costs can be controlled through reductions
in direct labor, using buyer power to push down cost of goods sold, and reducing capital cost growth.
Net income may not grow as much as Whole Foods might like, but the company can easily still remain
profitable and continue to grow.
RECOMMENDATIONS
Some financial recommendations for Whole Foods would be to grow net income, cut cost,
increase revenue, reduce capital expenditures, and raise capital through equity shares and reduced
borrowing. The impact of the recession requires that Whole Foods takes an action of conservative
growth. This will help stabilize their net income profits. They could open fewer stores at the moment
and reduce the average square footage of each store. Whole Foods really has no influence on deflating
factors but they have some influence over cost, so as a company you need to be aware of the factors
that you are in control of that will help the company increase net income. Deflating prices provide
opportunity to negotiate lower prices and rates with suppliers and landlords. Whole Foods needs to use
their buying power to pressure suppliers and negotiate for lower wholesale prices. These savings will
reduce supply chain costs and costs of goods sold. Whole Foods could also scale back by closing
unprofitable stores, reuse equipment, and/or terminate leases. They could raise capital by selling shares
of common stock then use that capital for new store purchases. Equity capital will avoid debt through
banking institutions.
Another way for Whole Foods to prosper is to expand a little more on their marketing strategy.
First of all they should increase the marketing budget. They should reaffirm Whole Foods’ commitment
to its core, social-organic market. Reach out to the price sensitive, health-organic market. Target the
cross-over market from the restaurant industry who are looking for less expensive dining options. They
could repackage their goods to be sold as “cook-at-home restaurant boxes” to intrigue those converting
over from the restaurant dining option. Whole Foods should also focus marketing efforts on the West
Coast and New England because these regions have the highest organic market density (). They could
increase private-label products like meat and seafood. Another good marketing idea is to expand service
offerings like store events for the community or online convenience ordering. They need to promote
their product and brand name more often and a great way to do this would be to place their products
on shows like the Biggest Loser or Top Chef. Television viewers will be more inclined to buy their
product if they see it successfully used by other individuals on these shows. A big sale promotion that is
almost always successful is to create a customer loyalty card. This would be a discount club card that
maybe requires online sign-up. For every $1,000 spent at a Whole Foods store, the customer would
receive a 10% off voucher (or something like that). This helps Whole Foods track consumer product
preferences and sales accruement per customer. At the end of the year maybe invite the highest ranked
customers to a customer appreciation event. Any of these tactics that help increase customer loyalty
will greatly help Whole Foods retain and grow in their consumer market.
An onsite fitness facility would be a great addition for the Whole Foods employees. It builds
upon their image of helping create a healthier individual. What better way to do that than with eating
organic foods and exercising? If an onsite facility isn’t in the budget, then maybe an alternative option
would be to pick up the cost of an employee’s gym membership if they visited their health club 30 times
a quarter. Any incentive that shows that the company is conscious and supportive of good health habits,
only builds upon their mission of “Whole People.”
CONCLUSIONS
After analyzing this company, our group agrees that Whole Foods is a steady, reliable company
that takes pride in their products. They have a good vision of where they want to go and a mission
statement that will take them there. Whole Foods will probably have a difficult time over the next few
years, but they have shown as a company that they can persevere through about anything. Revenue
growth can be spurred through a marketing campaign and community outreach. Costs can be controlled
through reductions in direct labor, using buyer power to push down cost of goods sold, and reducing
capital cost growth. Net income may not grow as much as Whole Foods might like, but the company can
easily still remain profitable and continue to grow.
CONSEQUENCES
The possible consequences that Whole Foods might face if they choose not to follow some of
the recommendations listed above, or simple continue to stay on the same path they are now, is that
the company could be out-priced and bought out by other rivals in the industry. They might see an
increase in organic foods in more cost-conscience groceries like Save-A-Lot or Kroger. Consumers who
are on the fence about organic products might choose to first try out the cheaper brand to save the
pocket book. If Whole Foods doesn’t find a way to compete with the general grocery stores, like Kroger,
they could soon become obsolete. Whole Foods needs to find a way to gain customer loyalty in the
organic food market. They also need to grow in the number of customers they provide to on a regular
basis, instead of just once or twice a year. As mentioned before, these customers could easily choose to
go to another grocery to buy a cheaper priced good. If Whole Foods doesn’t find a way to prove why the
consumer should pay a higher price for their organic product, then they will likely find themselves
loosing profit quickly.
SUMMARY
Through all of the ups and downs that Whole Foods has experienced, at the end of the day you
have to recognize that they are a great up and coming company and a force to be reckoned with in the
food retail industry. With the growing popularity and demand for organic and natural products, we feel
that Whole Foods would be a great company to invest in. They have a very effective strategy and are
always looking for ways to improve their standings for consumers and investors. While financial
standings aren’t the primary goal of the organization, they do realize the importance of creating
economic value for the shareholders and that is essential to have a successful operation. Whole Foods
also has one of the highest employee retention numbers out there because they understand the
importance of creating a work environment that employees can enjoy and know you have to give back
to the people who work for you in order to keep them in your organization. Without employees, an
organization could never exist and in their motto, “Whole People” doesn’t just apply to the consumers,
Whole Foods wants to make sure they are creating a better employee and a healthier work environment
which is why we feel Whole Foods would be a great organization to work for. The products that Whole
Foods offers are ones that were made with the intention of creating a healthier tomorrow. Everyone is
concerned about staying healthy and doing all the little things it takes to make sure we are as fit and
active as we can be, and Whole Foods helps to supply the foods and products that we need to do that.
They also focus on creating a healthier environment which many people are concerned about as well.
We would definitely consider buying products from Whole Foods; however the prices on their products
may affect how much we would actually buy. The increased price comes from the lack of competition
and as the market demand shifts, the price will begin shifting as well. When we started this case, none
of us had ever even heard of Whole Foods, and through our analysis we have truly stumbled upon what
we are sure will be one of the best organic retail companies in the industry.