Whole foods market strategic analysis


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Whole foods market strategic analysis

  2. 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. 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. Goochs • Natures Heartland• Fresh Fields • Food For Thought• Bread of Life • Harrys Farmers Market• Amrion • Select Fish• Merchant of Vino • Fresh & Wild• Allegro Coffee • Wild Oats© Markets
  4. 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. 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 clothesApproximately 20,000 different food & non-food product types at each store
  6. 6. Bread & Circus Natures Heartland Merchant of vinoMrs. Goochs 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
  7. 7. Still 4.2% of Grocery MarketButIncreasing Organic Food SalesOrganic Industry:Grew by 9.5%, $31.5 billion insales in 2011. (9.5% up)
  8. 8. Gradual Economic Comeback
  9. 9. 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 fastBargaining 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
  10. 10. $108 billion in 2005 $137 billion in 2011
  11. 11. Education: Higher earnings and lower unemployment rate More Education, More Money U.S. US is both especially unequal and has especially low mobility
  12. 12. • Whole Foods Market goal To reach 1,000 stores in theTarget U.S.・Older citizens andUrban singlesOffer・Enjoyable shoppingenvironment・An amazing variety of itemsapproximately 20,000 differentfood and non-food product typesat each store location
  13. 13. Technology PhysicalOrganization Financial
  14. 14. •More than 310 stores in North Americaand the United Kingdom.•Team Members: 62,000+•Distribution Centers: 10•Regional Bakehouses: 7•Commissaries: 5•Common Stock: capital investment over$1.6 billion.
  15. 15. Whole Foods is a proven and viable business with double-digit growth Gross Margin: 34.58 % Income: • Excellent team $ 168 leaders million • Management chainRevenue: $ 7.2million • Modern information systems • Energy sources (largely wind-energy credits)
  16. 16. 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
  17. 17. • 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
  18. 18. • The value-added pricingGeneral Strategy strategy (differentiation strategy): keep customers loyal by providing service the customers cant find anywhere else.
  19. 19. 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
  20. 20. • Discounting: Promotional Strategy• Great Deal" campaign:Value Tours
  21. 21. • 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:
  22. 22. Deterioration of the American economyThe uncertain future of the organic segment of the grocery industry,The increased competition of the major players in the food industryThe increased cost of foodThe acquisition of Wild Oats and the Federal Trade Commission‟ssubsequent objectionThe increasing demand of consumers for high quality, lowcost, healthier foods.Scarce resources, the supply of organic and natural grown foodThe location of Whole Foods Market stores
  23. 23. 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
  24. 24. • 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
  25. 25. • Highest- quality brand reputation• Dedication to the social ethics of organization• Industry best customer service• Strong supply chain• Private label program
  26. 26. • 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
  27. 27. External Analysis Internal Analysis Opportunitie Strength s Threats Weakness Strategic Choice
  28. 28. • Whole Foods market targets are both broad cross-section of Buyers and a Narrow buyer segment, so should Focus • Low-cost strategy • Differentiation Strategy
  29. 29. • Focused Differentiation• Increase marketing and goodwill to grow comparable store sales• Look for ways to decrease upstream supply costs• Continue long-run expansion
  30. 30. • 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
  31. 31. • 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
  32. 32. • 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
  33. 33. • 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)
  34. 34. • 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
  35. 35. • Reduce store openings by 30% of 2008 levels• Direct store growth in the Pacific Northwest and build a presence in Britain
  36. 36. • 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
  37. 37. • 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
  38. 38. • 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