Kyra Kane
Emily Lospennato
Brett Simon
Kate Sinervo
Ashley Waxman
CO 700 Final Project:
Strategic Plan for
Whole Foods Market
May 2, 2012
Presentation Outline
I.
History & Leadership
II.
Current Market Position & Competitors
III.  SWOT Analysis
IV.  Strategic Plan
V.  Conclusion
Market Position: Whole Foods History
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Whole Foods Market was founded in Austin, TX, in 1980.
One of the first to bring natural foods to a supermarket format.
Original aim: A simple and relatable grocery store featuring “good,
wholesome food; not a ‘health food’ store filled with pills and
potions” (Our History, Whole Foods).
Began as a merger between two smaller natural foods stores and
owes its continued success to expansion through mergers and
acquisitions.
While growth began in the South/ Southwest, by the mid-90s,
Whole Foods had coast-to-coast reach.
The mid-2000s saw movement to international markets, Canada
and the United Kingdom.
Market Position: Organic Food
•  Sales of organic food & beverages increased from $1B in
1990 to $26.7B in 2010.
•  Highest growth = organic fruits and vegetables.
•  Organic food comprises 4% of all food & beverage sales in
the U.S. in 2010 (therefore, there is room for growth).
•  Growth in organic food market has been steady: 20% per
year over last seven years.
Market Position: Whole Foods Today
The world leader in natural and organic foods.
More than 310 stores in North America and the UK.
62,000+ employees.
Always room for expansion.
A mission-driven company:
“Whole Foods – Whole People – Whole Planet.”
•  Listed on FORT UNE’s list of the “100 Best Companies to
Work For,” for the last 15 years.
•  Retail Innovator of the Year Award from the National
Retail Federation.
•  20 years as a publicly traded company (NASDAQ: WFM).
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Leadership
•  The Visionary (innovative community & environmental
sustainability initiatives): Walter Robb, Co-CEO
•  Co-founder/CEO: John Mackey
•  Chairman of the Board: Dr. John B. Elstrott
•  Director: Gabrielle Greene
Core Values
•  Selling the highest quality natural and organic products
available.
•  Satisfying and delighting our customers.
•  Supporting team member happiness and excellence.
•  Creating wealth through profits and growth.
•  Caring about our communities and our environment.
•  Creating ongoing win-win partnerships with our suppliers.
•  Promoting the health of our stakeholders through healthy
eating education.
Preview to Strategic Plan
•  Primary core value is producing people with high quality organic
and natural products.
•  But, there is a stigma around Whole Foods that it is luxurious
and expensive, out of reach of lower-income consumers.
•  This stigma is not true in that Whole Foods has its 365
Everyday Value brand which provides hundreds of commonly
used products at reasonable prices.
•  To shed the stigma and promote the benefits of healthy eating
to wider audiences, we propose Whole Foods Corner stores (WF
Corner), bodega-like convenience stores for customers to
purchase healthy alternatives to other convenience store fare.
These stores would be located in densely populated urban areas.
Competitive Landscape
•  Whole Foods is the current market leader in the
organic foods market.
•  While it would seem that Whole Foods’ major
competitors would be other organic markets, research
shows that large supermarket chains that reach into
the organic grocery realm and undercut Whole Foods’
prices are the main competitors.
Competitive Landscape
Whole Foods’ three main competitors are Safeway,
Kroger, and SuperValu.
Competitors: Safeway
•  4th largest traditional food retailer,
after Wal-Mart, Kroger, and Supervalu.
•  1,725 supermarkets under nine brand names:
Safeway, Von’s, Pavilions, Randalls, Tom Thumb,
Dominick’s, Genuardi’s, Eastern, & Carrs.
•  Most stores are located in the western half of the
United States and Canada.
•  Currently consolidating its 70 private label brands into
10 power brands, including O Organics.
Competitors: Kroger
•  Largest traditional grocery store in the U.S. & secondlargest food retailer after Wal-Mart.
•  Operates 2,400 supermarkets.
•  Sells food under 24 of its own brands in three tiers:
Private Selection, “banner brands,” and Kroger Value.
Competitors: SuperValu
•  Operates 1,161 retail food stores.
•  Some of the brand names include: Acme, Farm Fresh,
Hornbacher’s, Jewel-Osco, Shaws, Shop ’n Save, &
Star Market.
•  Acquired Albertson’s in 2006 which expanded its
market into Boston, Chicago, Philadelphia, & Southern
California.
•  17% of the products sold at Supervalu stores are
private label.
Competitive Chart
Company (Fiscal Year) Comp Sales Growth Gross Margin Opera;ng Margin Net Profit Margin Capital Expenditures Whole Foods 7.1% Market (2010) 34.8% 5.9% 2.7% 2.9% Safeway (2009) (4.90%) 28.6% (1.54%) (2.69%) 2.08% Kroger Company (2009) 0.90% 22.6% 1.42% 0.07% 2.99% SuperValu (2009) (5.1%) 22.5% 2.96% 0.97% 1.70% Potential Competitors
For the purposes of this project, Whole Foods has several
potential small supermarket and convenience store
competitors. These competitors include 7-Eleven and The
Fresh Market.
Competitors: 7-Eleven
•  National leader in convenience stores
with 6,523 stores in the US and Canada,
but also has stores all over the world.
•  7-Eleven was the first convenience store to be open 24
hours a day, sell fresh-brewed coffee in to-go cups, &
have a self-serve soda fountain with several brands of
soda.
•  Within the US, 7-Eleven sells the most USA Today
newspapers, cold beer, bottled water, Gatorade, grilled
hot dogs, and money orders.
•  One-third of 7-Eleven customers purchase foods to be
consumed immediately.
Competitors: The Fresh Market
•  Headquartered in Greensboro, NC.
•  Operates 115 stores in 21 states in the
Southeast and up the East Coast.
•  Specialize in superior perishable groceries.
•  Sells its own brand of products labeled as The Fresh
Market (T FM).
Competitive Landscape: Rationale
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Our research shows there is a gap in the marketplace of a
combination of affordable organic foods and convenience stores.
By filling this gap, we aim to reach an untapped audience,
currently reached by 7-Eleven and other convenience stores, who
are price-conscious or lead busy lifestyles (e.g., students, lowincome urban households).
Whole Foods Corner Stores (WF Corner) would offer a an
affordable outlet to grab a healthy bite on the go.
Rather than getting old, processed sandwiches or processed
cereals from 7-Eleven, customers, can look to WF Corner for a
healthy, quick alternative to meet their immediate grocery and
on-the-go needs.
SWOT Analysis: Strengths
1.  Employee satisfaction – Whole Foods was ranked #24 on Fortune’s
2011 list of the “100 Best Companies to Work For,” and has been
ranked on this list consecutively for 14 years. This supports one of
our core values: “Supporting team member happiness and
excellence.”
2.  Proven ability to weather economic strife – Despite the rocky
economy, Whole Foods delivered 8.5% comparable store sales in 2011,
the Company’s highest result in five years. The Company also
increased sales by 12% and improved its operating margin to 5.4%.
SWOT Analysis: Strengths
3.  Excellence in Corporate Social Responsibility – Whole Foods has
implemented a variety of platforms designed to give back to the
community and improve sustainability. These include: 1) “The
Whole Trade Guarantee,” which ensures that workers in
developing countries are compensated fairly and are guaranteed
suitable working conditions. 2) “Animal Welfare,” which is
designed to improve the quality and safety of the meat and
poultry sold in Whole Foods stores, and 3) “Eco-Scale,” a rating
system, which allows customers to quickly identify a cleaning
product’s ingredients and the impact it has on the environment.
SWOT Analysis: Weaknesses
1.
High prices – WF mostly sells locally grown and organic food
products. Therefore, costs are significantly higher than at other
grocery stores. Though the economy is recovering, many people are
still looking to save money and may not have the means to shop
regularly at our stores.
2.  Limited international exposure – WF has more than 310 stores in the
United States, Canada, and the United Kingdom. This is limiting, as
there are several other regions, especially in Europe, that would
benefit from the products and services WF offers.
3.  Sustainability backlash – WF recently implemented a seafood
sustainability plan, which bans gray sole and skate from all stores.
Massachusetts fishermen (backed by Senator Scott Brown) are
outraged by this policy, claiming WF is practicing forced “political
correctness” rather than rational decision making. In April 2012,
Senator Brown wrote a letter to WF asking to reverse the decision.
SWOT Analysis: Opportunities
1.
International growth – WF should seek opportunities in other
countries, specifically wealthy regions in Europe. With social media
platforms, such as Facebook, Twitter, and LinkedIn, WF could easily
garner international excitement and enjoy immediate success
overseas.
2.  Organic convenience stores - Smaller “bodega style” markets will
appeal to students and individuals of lower socioeconomic status.
The exclusivity of WF will be lessened and, as a result, the
Company will reach a new, perhaps larger, customer base.
3.  Whole Foods Rewards – WF does not currently have a rewards
program. WF could implement a customer rewards savings card,
which will offer discounts and free products to loyal, repeat
customers. These cards can be used at any Whole Foods, including
the WF Corner stores.
SWOT Analysis: Threats
1.
Perishable foods - WF carries a significant amount of perishable
food products. If such products are not sold in a timely manner,
this could result in monetary loss.
2.  Unions - Unions may attempt to organize the Company’s team
members. All WF team members are currently non-union.
Occasionally, unions attempt to organize the team members,
which can be detrimental to the Company’s financial positioning
as well as overall employee morale.
SWOT Analysis: Threats
3.  Government regulations - Changes in government regulations could
negatively impact the company. WF is responsible for complying
with health and sanitation standards, appropriate food labeling,
minimum wages, and licensing for the sale of food. A sudden
change in such regulations could prevent new stores from opening
or force existing stores to temporarily close.
4.  Health epidemic – A widespread health epidemic could negatively
impact the company. WF is a place for people to gather, socialize,
and enjoy food. In the event of a major health epidemic,
customers may avoid visiting the stores.
Strategic Plan: Vision
•  Convenience stores to rival 7-Eleven-type stores &
offer healthier, fresher, organic fare.
•  Prepared sandwiches, salads, wraps, boxed lunches, &
drinks delivered every morning from local WF
Markets.
•  Small organic produce, dairy, frozen foods, & pantry
items sections.
•  Would be placed in five of
Whole Foods’ top markets,
which are densely populated
major metro areas.
Strategic Plan: Vision
WF Corner Floor Plan: approx. 3,500 square feet
Welcome Stock room, offices, etc. Strategic Plan: Step 1 – Mission
Statement
Our mission is to expand Whole Foods Markets by
opening three natural/organic convenience stores
named WFC | Whole Foods Corner in each of five
regional markets across the United States in 12 months
to increase total sales by 15%.
Boston
Chicago
Los Angeles
New York
Boulder/Denver
Strategic Plan: Step 2 – Inventory
Clients – One of our core values is “satisfying and
delighting our customers,” which we do with our
pleasurable store experience, outstanding customer
service, high quality standards, and differentiated
product mix.
However, there is a customer sector we have yet to
reach. These elusive customers believe that natural,
organic food is always expensive, and thus do not ever
enter our stores. We plan to tap into this customer
group in search of affordable whole food with our new
line of convenience marts.
Strategic Plan: Step 2 – Inventory
Products & Services – Our current product offerings
are of top quality and run the gamut from very
expensive to affordable. We plan to fill our WF Express
stores exclusively with our economical Whole Foods
brand of natural and organic products, Whole Foods
Market Brand and 365 Everyday Value. Our
commitment to customer service is priceless and would
flow to these convenience marts.
Strategic Plan: Step 2 – Inventory
Financial Performance & Operations
Retrieved from Whole Foods 2011 Annual Stakeholders Report.
Strategic Plan: Step 2 – Inventory
Financial Performance & Operations (2011)
Consistent financial growth and revenue
•  Net revenue = $10.1 billion
•  Operating income = $548 million
•  Operating margin = 5.4%
Consistent growth in visibility
•  32 new leases signed
Strategic Plan: Step 2 – Inventory
Competitive Advantage – WF is the market leader in
organic foods. WF has the inventory and established
value product line to launch this plan without having to
create new products from scratch. There is currently
no national convenience store chain of exclusively
natural/organic foods.
Environment – Currently no organic food chain has the
inventory of WF to successfully implement a plan of
this magnitude.
Strategic Plan: Step 3 – Goals
Qualitative –
ü  Garner a new customer following.
ü  Teach the American public that eating healthy,
organic food does not have to be expensive or
difficult.
Quantitative –
ü  Increase total sales by 15%.
ü  Successfully open 15 new convenience stores in five
markets, and after these stores have been open
for one year, expand to five more markets.
Strategic Plan: Step 4 – Scenario
Planning
1. Alienation of loyal customers
Customers may find convenience stores cheapen the brand,
tarnishing brand image.
If customers feel the brand is cheapened, then WF will implement a
customer loyalty rewards program for WF Market customers
(excluding WF Corner).
2. Economic times
Current recession may prove sales projections are too high.
If customers feel WF Corner is too expensive, then WF will
implement a coupon book or weekly-themed discounts, and
potentially reevaluate pricing structure.
Strategic Plan: Step 4 – Scenario
Planning
3. Overestimation of target customers’ use of convenience stores
If customers are not as receptive as anticipated, then we can shift
the focus onto prepared food items for healthy, on-the-go meals.
4. Disruption of relationships with loyal vendors/suppliers
If vendors of WF Markets feel slighted by not being represented in
WFC stores, then we will
A) reaffirm their value and success in WF Markets
B) Show that WFCs are not a target market for them
5. Increased competition
A current Whole Foods Market competitor or a new, independent
brand may create a competing organic convenience mart.
If another competitor surfaces in the convenient organic foods
marketplace, then we will put more effort into marketing,
advertising, and PR strategies.
Strategic Plan: Step 5 – Action Plan
•  Goal: Garner a new customer following by
successfully opening 15 new convenience stores in five
regional markets within one year. Projected increase
in sales=15%.
•  Strategies: Secure locations and complete construction
in under one year. Transfer managers and
employees from WF Markets to WF Corner.
•  Implement advertising, marketing, and PR
campaigns – create social media profiles, online
advertising, posters in public transit stops, &
billboards.
Strategic Plan: Step 5 – Action Plan
ROI for One Year
Total costs
•  $150,000/store x 15 stores = $2,250,000
•  Additional costs (inventory, labor, etc.)/store x 15 stores
= $1,325,000
Total = $3,575,000
Total benefits
•  Projected revenue/store x 15 stores
Total = $7,500,000
ROI = Net return (total benefits – total costs)
Total costs
ROI = 109%
Strategic Plan: Step 5 – Action Plan
Timeline
Present
WF Corner to
stakeholders
April
Secure leases for
all 15 locations
May
Scour locations
to rent or
purchase
Start construction
on locations
June
Plan design and
layout of stores
July
August
Develop
marketing/
advertising
strategies
September
October
Strategic Plan: Step 5 – Action Plan
Timeline
Finish
construction
Hire
employees
Stock nonperishable
items
November
December
January
Hire
managers
February
Establish
connection
with
supplier/
distributors
Implement
advertising
campaign
March
Opening week
nationwide around
Earth Day
April
Finish stocking/
inventory
Strategic Plan: Step 6 – Communicate
Plan to Team
•  Call executive staff meetings with corporate & regional
managers to discuss any issues with WF Corner stores.
•  Arrange regional staff meetings with employees of
each WF Market headed by all regional store leaders.
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For regions not implementing WF Corner stores, issue a memo
to employees about new expansion.
•  Circulate literature about goals, objectives, operations, &
expected sales from new expansion.
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Beat the press: Our goal is to deliver the news to our
employees before they read about it in the media.
Strategic Plan: Step 6 – Communicate
Plan to Team
•  Communicate with employees in each division about
intraregional transfer opportunities, which may
include promotions.
•  Provide online feedback forums for employees to
offer suggestions and criticisms of new expansion.
•  Familiarize new WF Corner employees through staff
meetings and literature concerning expectations,
standards, and values of WF.
Strategic Plan: Step 7 – Execute
•
Open stores in all five regions during the week of April 22, 2013
(week of Earth Day).
•
Offer relevant Earth Day activities, including Bicycle Benefits, a
toxic swap, & free samples.
•
In the words of WF team leaders, “Let’s have a great day!”
Thank you, and have a green day!
References
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Goodnough, A. (2012, April 21). A ban on some seafood has fishermen
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www.sec.gov/Archives/edgar/data/
865436/000110465910059917/a10-19737_110k.htm
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