The purpose of this study is to understand the business philosophy behind the Whole Foods Market Inc which is the largest natural and organic foods supermarket in USA. The study will look in to the business strategy of the company along with firm specific resources and capabilities. Further, study will evaluate the future challenges and opportunities for the company.

1. A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc 1
A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc
Charm Rammandala
California Intercontinental University

2. A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc 2
Abstract
The purpose of this study is to understand the business philosophy behind the Whole Foods
Market Inc which is the largest natural and organic foods supermarket in USA. The study will
look in to the business strategy of the company along with firm specific resources and
capabilities. Further, study will evaluate the future challenges and opportunities for the company.

3. A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc 3
A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc
Whole Foods Supermarket Inc is the biggest supermarket in USA which sells natural and
organic products. It’s the first and the only supermarket which is nationally accredited as
‘certified organic grocer’. Company has 462 stores in North America and United Kingdom.
Founding philosophy behind the Whole Foods is to seek out the finest natural and organic food
products available, ensure the highest quality and have an unshakable commitment to sustainable
agriculture. It generated US$13.1 billion in revenue last year with net income of half a billion
dollars. 97% of the revenue generated in USA making them fully depended on the USA
operation for the company’s financial performance (Diederich 2014)
Whole Foods business strategy
Being true to the company philosophy, Whole foods business strategy revolves around the
core concept of organic and natural food supplier to the nation. Company had ensured to make
all stores throughout the country to have the green certification as an accredited organic grocer.
Whole Foods mission is to set the standards of excellence in food retailing. This is a very
powerful mission statement and it helps to attract and retain a loyal base of customers (Seth
2016)
Whole Foods strongly believes that its emphasis on highest quality standards set it apart
from the rest of the supermarkets. Also, company bans many ingredients such as certain foods
colorings’, flavors, sweeteners, hydrogenated fats and meat prepared from animals raised with
antibiotics. This strategy to ban certain ingredients which are commonly found in other
supermarkets help to create an identity for the company and create a niche market in the crowded
market place (Diederich 2014).

4. A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc 4
There are 3144 food supermarkets in USA with 37459 stores. It is therefore very important
to have a differentiation strategy to stay relevant and overcome the competition. Emphasizing on
the core massage of sustainably produced organic and natural food retailer is the driving force of
the company. It gives a sense of purpose to the customer to shop in Whole Foods and higher
prices justified by the extra effort company putting to source the best and quality products
(Grimes 2015)
Firm specific resources of Whole Foods Supermarket Inc
Resourced based view discuss the firm specific resources. Every company has its core
competencies built over time and this knowledge enable firm to stay ahead of the competition
and create a market advantage. Combination of physical, organizational and human capitals of
the firm create the firm specific resources (Peng 2012)
When thinking about organic and quality foods, Whole Foods supermarkets is the first name
comes to mind in virtually every customer in the country. Over the last 35 years, they have
managed to create an identity for the company as the premier destination for the organic and
natural foods. This is as a result of firm’s internal knowledge on how to source the best food
products from the farmers. It is vital to understand food growing and cultivating methods, how to
fertilize and what pesticides to use and which ones to avoid (Diederich 2014)
Similarly, knowledge on food processing techniques and storage is very important to keep
the goods fresh and healthy. Having the processes and facilities to avoid cross contamination and
spoilage is a vital knowledge. By training the team members on the job specific knowledge is
extremely important and once trained they become an integral part of the company. being able to
explain the customer’s concerns and inquiries from the healthy food point of view is a very

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important to create a better customer experience and loyalty. This is even more important when
considering customers expected to pay higher prices for similar products in other supermarkets.
Whole Foods has managed to create a firm specific knowledge over the years in terms of
knowledge on supply chain and organic food processes. Company invested in stores which gives
best access to target customers enabling company to be visible in key locations. Building a team
of employees who are knowledgeable on organic and natural foods and how to source and sell
them to customers is a key resource of the company (Grimes 2015)
While acknowledging customer perception on organic foods declining why Whole Foods
still emphasizing the same business model
Over the last two decades, there was a movement among the general public to eat healthy and
heightened awareness about the origin of the food they eat. This trend has largely shaped the
Whole Foods Supermarket we see today. Company was able to charge above average prices for
its products as customers were willing to bear the additional cost knowing it would make them
feel good about their choices (Seth 2016)
It is noted that Organic food sales has been increasing steadily over the last decade in USA.
Chart 1 demonstrate that total value of organic products in 2015 was US$43.3 billion which is an
increase of US$4.2 billion from previous year. The average increase of overall food market is
about 3.3% per annum while the growth of organic food is in double digits averaging 10.2% per
annum (Grimes 2015).

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Chart 1 (Organic Trade Association)
While the overall consumer demand increasing for the organic and natural food market,
traditionally strong players in the segment such as Whole Foods not seeing the same rate of
growth on its sales. This is predominately due to the stiff competition faced by the company.
There is an intense pressure from the rival supermarkets as they too tapping in to the products
offered by the company (Seth 2016)
Walmart, Costco and Sprout farmers market are few of the new entrance to the organic and
natural food market. While new to the organic food industry, these supermarkets are not new to
the grocery and food industry. All the infrastructure and necessary resources are available for
them to make a quick transition and more importantly offer the products significantly cheaper
than Whole Foods (Grimes 2015)
Savvy shoppers who are interested in organic and natural food products and seeing the
options available for them in other supermarkets are opting to cheaper options. Shopping
experience might not be as great as Whole Foods but savings are a strong motivation factor for
them to shop at alternative supermarkets (Seth 2016).

7. A Detailed Study to Analyze the Business Strategy of Whole Foods Market Inc 7
Summery
Over the last 30 years Whole Foods have maintained an image of leading retailer of organic
and natural food for the nation. The demand for the organic and natural food products increased
in double digits due to the health-conscious customers. Over the last few years’ traditional
retailers have noticed the trend and started their own version of organic and natural foods. This is
causing a problem to Whole Foods as their growth is dramatically reduced due to customers
opting to cheaper options provided by competitors.

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Reference
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Diederich, M (2014). Whole Foods Market Business Strategy Analysis, Pearson, NY
Grimes, R. (2015). Supermarket Business. New York, McMillan
Kourdi, J (2015) Business Strategy. A guild to effective decision making. Irwin, McGraw-Hill
Seth, A. (2016). Supermarket Wars. Global Strategies for Global Retailers San Francisco,
Pearson
Peng, M. (2012). Global Strategy. New York, South-Western