1. Case Study: Whole Foods Market
TRAN THI TRAM ANH
RAHEL HAILU
SEIKO OTAKE
KIM JU YONG

2. • Whole Foods Market was Whole Foods History
founded in Austin, Texas, by four
local businesspeople
• 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.

3. The growth of WFM has been accomplished through
mergers and acquisitions, these are the list of
notable companies in their own right.
Wellspring Grocery • WholePeople.com (e-
• Bread & Circus commerce subsidiary)
• Mrs. Gooch's • Nature's Heartland
• Fresh Fields • Food For Thought
• Bread of Life • Harry's Farmers Market
• Amrion • Select Fish
• Merchant of Vino • Fresh & Wild
• Allegro Coffee • Wild Oats© Markets

4. • Selling the highest quality natural and organic products
available
• Satisfying and delighting our customers
• Supporting team member happiness and excellence
• Creating wealth through profits & growth
• Caring about our communities & our environment
• Creating ongoing win-win partnerships with our suppliers
• Promoting the health of our stakeholders through healthy
eating education

5. Variety of different
products
• Coffee, tea
• Fresh fruits & vegetables,
• Frozen fruits & vegetables
• Nuts, seeds, trail
mixer, nuts, seed butters
• Rice, grain, dry bean and
spices
• Natural cosmetics
• Baby clothes
Approximately 20,000 different food & non-food product types at each store

6. Bread &
Circus
Nature's
Heartland
Merchant of
vino
Mrs. Gooch's Amrion
Allegro coffee Fresh Fields
Whole Foods
Wellspring
Grocery
Saferway Food for
Thought
Bread of Life
More than 310 stores in North America and the
United Kingdom.
Team Members: 62,000+
Distribution Centers: 10
Regional Bakehouses: 7
Commissaries: 5
Common Stock: traded on Nasdaq®, symbol: WFM

8. Still 4.2% of Grocery Market
But
Increasing Organic Food Sales
Organic Industry:
Grew by 9.5%, $31.5 billion in
sales in 2011. (9.5% up)

9. Gradual Economic Comeback

10. Supplier
-Limited number of
suppliers, have power
over the retailers. E.g
Farmers
Buyer Rivalry
-Bargaining power of
-Consumers are willing to supplies : independent supermarkets
pay (Kroger, Safeway, others), mass
Low merchandisers and super
-Better educated and centers (Wal-
wealthier consumer base, Mart, Target), convenience
stores, wholesale clubs
at same time (Sam’s), restaurants and fast
Bargaining power of buyers food chains (who compete for
High Whole consumer food dollars) natural
food stores such as Trader
*Many sellers = Many Foods Joe’s, local farmers’
choices markets, and internet grocers.
High
Barrier of Entry
Substitutes professional workforce
supermarkets as high cost of obtaining
gateway channels organic food products
into organic
foods, rather than -locations must be placed
substitutes in strategic locations
Substitute
Low Low

12. $108 billion in 2005 $137 billion in 2011

13. Education: Higher earnings and lower unemployment rate
More Education,
More Money
U.S.
US is both especially
unequal and has
especially low mobility

14. • Whole Foods Market goal To reach 1,000 stores in the
Target U.S.
・Older citizens and
Urban singles
Offer
・Enjoyable shopping
environment
・An amazing variety of items
approximately 20,000 different
food and non-food product types
at each store location

15. Technology Physical
Organization Financial

16. •More than 310 stores in North America
and the United Kingdom.
•Team Members: 62,000+
•Distribution Centers: 10
•Regional Bakehouses: 7
•Commissaries: 5
•Common Stock: capital investment over
$1.6 billion.

17. Whole Foods is a proven
and viable business with
double-digit growth
Gross
Margin:
34.58 %
Income: • Excellent team
$ 168 leaders
million • Management chain
Revenue
: $ 7.2
million
• Modern information systems
• Energy sources (largely wind-energy
credits)

20. Human Capital Innovation Reputation
Resource • Resource of
The detail
• Tacit Knowledge • Suppliers process of any
• Education food being sold
• Employees
• U.S Department of
• Work-related • Customers: Agriculture
Know-how standards
adults & Children
• Work-related – a healthy style
competence

22. • A very unique business model:
The philosophy : “customer first, team member second, stockholder third.”
• The perishable execution
• Corporate culture is very unique
• A very unique brand

23. • The value-added pricing
General Strategy
strategy (differentiation strategy): keep
customers loyal by providing service the
customers can't find anywhere else.

24. The Whole Foods Market operations
Operations strategy expansion and
strategy:
acquisition
• creating higher barriers of entry for their potential competitors
• expanding into new and existing areas, to include the international markets
Financing strategy
• approved a stock repurchase program of up to $200M over four years (2007-
2010)
• The firm‟s Long Run Debt Ratio, Cash Flow from Operations to Total Liabilities
Ratio: a good indication of the firm‟s long term risk

25. • Discounting:
Promotional Strategy
• Great Deal" campaign:
Value Tours

26. • Website‟s design:
Promotional Strategy
•E-newsletter sign up
•Cooking tips
•Company blogs
•Product and store locators
• Advertising: •Company and investor information
•Word of Mouth Advertising •Links to Whole Foods‟ pages on
•Television Advertising social networking sites
•Print Advertising
•Online Advertising (Social network
marketing & Google AdWords )
•Billboard Advertising
•In-Store Advertising • Sampling:

27. Deterioration of the American economy
The uncertain future of the organic segment of the grocery industry,
The increased competition of the major players in the food industry
The increased cost of food
The acquisition of Wild Oats and the Federal Trade Commission‟s
subsequent objection
The increasing demand of consumers for high quality, low
cost, healthier foods.
Scarce resources, the supply of organic and natural grown food
The location of Whole Foods Market stores

28. SO • Weakness
WO
• Strength 1.Offer •Sell of Stock
1.Offer the best
products that
products for the •High Price
• Organic market leader can only be
buck •Transparency of
• Empowering work Environment found at WFM strategy
2. More national
• Customer satisfaction 2.Make WFM •Weak in operation
wide expansion
• Focused grwoth strategy an eponym for •Conservative
3. Constant
• Sustainable Future top quality advertisement
innovation and
• Experienced Top Management organic natural •Increased rental
capitalism that is
• Quality Standards food expenses
hard to imitate
• Customer Service
• Well trained staff ST
• Good distribution system WT • Treat
1.Acquire new 1.Competitive
• Retail Innovation quality standards • New entrants
pricing • Substitute products
that are hard to 2.Constant
substitute • Culture imitators
innovation strategy • Competitor
• Opportunities 2.Stay ahead and products • Government
• National wide Appeal technology and
• Educate value of well-being agricultural takeover
• Leading organic producer concerns • Labeling and other
regulations
• Status, international awareness 3. Diversify
• Weak economic
• Retail innovation and capitalism retailing efforts
result
• Higher demand for organic • Employment
products situation
• Expansion in UK
• Growth in private label products

29. • The Whole Foods
brand stands for best
quality, organic goods
• Whole Foods appeals
to a greater social
responsibility
• Whole Foods has a
strong distribution
network
• Private-label brands
provide high-quality at
value-pricing

30. • Highest- quality brand reputation
• Dedication to the social ethics of
organization
• Industry best customer service
• Strong supply chain
• Private label program

31. • The organic industry will have
a hard couple of years
• But, consumers do not want to
compromise their health and
will continue buying organic
• Health-organic consumers will
go for value-priced goods
• Social-organic will also like to
see more value, but will shop
on ethics

32. External Analysis Internal Analysis
Opportunitie
Strength
s
Threats Weakness
Strategic Choice

33. • Whole Foods market targets are both
broad cross-section of Buyers and a
Narrow buyer segment, so should Focus
• Low-cost strategy
• Differentiation Strategy

34. • Focused Differentiation
• Increase marketing and goodwill to grow
comparable store sales
• Look for ways to decrease upstream
supply costs
• Continue long-run expansion

35. • Target Market should be
• 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
• Focus marketing efforts on
the West Coast and New
England, regions with the
highest organic market
density

36. • Use „Value-Based Pricing‟ to set goods
prices that reflect perceived value
• A price skimming strategy should be
continued, since Whole Foods‟ COGS is
higher than competitors
• Try to lower check-out aisle receipts
without discounting too deeply

37. • Repackage goods to be
sold as “Cook-at-home
Restaurant Boxes”
• Increase private-label
meat and seafood
offerings
• Expand service
offerings
• Store-events
• Online ordering

38. • Advertising
• Target restaurant cross-overs
• “Get more, Live Healthy”
• Restaurant parody
• Media placement
• Current Promotional Strategy
• Value Tours
• Discounting
• Advertizing
• Website design(Cooking
tips, company blogs, links
WFM pages on social
networking sites)

39. • CRM Loyalty Program
• Discount club card
• Require online sign-up
• For every $1,000, get 10%
off voucher
• Collect direct marketing
information
• Track product preferences
and sales accruemen
• Invite the highest ranked
customers to customer
appreciation events

40. • Reduce store openings by 30% of 2008
levels
• Direct store growth in the Pacific Northwest
and build a presence in Britain

41. • Community Events
• “Our Community Cares Days”
• Donate 10% of specific days‟, private-
label sales to Participating charities
• Promote the events through signage and
publicity
• Sponsorship
• “Fitness Challenge”
• Tie into product placements
• Promote through social networking sites and
publicity

42. • 20% reduction in work hours for hourly employees
• “A way to avoid further layoffs”
• Affects 10% of employees
• Save the company $28 million a year
• Some of the money saved will be used to finance R&D
• Pay Freeze
• Employees making more than $75,000 will not get
raises
• Share the sacrifice with those who are losing their
hours
• Pay bonuses in stock options
• Exceptions to this rule for key management

43. • Fund a R&D project to develop computerized, customer assistance
modules
• Size of an ATM machine
• Gives “Farm-2-Fork” tracking
• Provides nutritional information, cooking instructions, and recipes
• Activated by the Whole Foods loyalty club card
• Tracks searches-to-sales
• $20,000 to implement, paid through work hour reduction
• Use Whole Foods‟ buying power to pressure suppliers
• Negotiate for lower wholesale prices
• Threaten globalizing sourcing from Latin
• America Reduce COGS growth from 22.5% in 2008, to 20% in 2009-2011