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 worlds 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 companys cofounder and CEO, believes that Whole Foods
rapid growth and market success has much to do with its having remained a
uniquely mission-driven companyhighly 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). Mackeys 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. Mackeys 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 stateunadulterated by artificial additives,

sweeteners, colorings and preservativesis 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 Harrys 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 Harrys 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
todays 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 worlds 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 theyre 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 Krogers
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 theyre 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 doesnt 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 arent

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 theyre 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; dont blur
the firms 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 Mackeys 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 wasnt narrowing his focus on the financial success of the company; he
was genuinely looking out for the well-being 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 doesnt 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 companys 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,
youll see that Whole Foods is followed very closely behind by Trader Joes (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 Joes due to their store sizes and store locations. When you
talk about organic retail stores, many people have never heard of Trader Joes 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 didnt 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 consumers 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 dont 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 didnt need to acquire another
company; this decision seems to be a rash decision that wasnt 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 Mackeys 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 FTCs
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, Mackeys actions appear to be more inappropriate and
unprofessional than anything else. The first of Mackeys 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 doesnt 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 Foods 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
companys position on the matter (Case in Book). All in all, Mackeys 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 Mackeys 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 doesnt 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. Its 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 isnt in the budget, then maybe an alternative option would be to pick up the
cost of an employees 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 doesnt 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
doesnt 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 arent 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
doesnt 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.