The document discusses Whole Foods' plans to launch a new store format called 365. Key points: 1. The 365 stores need a different product offering and target market than traditional Whole Foods to avoid competition. They will target the missing middle-income segment that Whole Foods does not currently attract. 2. The 365 stores will focus more on products and less on amenities to attract cost-conscious customers. This will require operational changes and reduced costs. 3. Launching 365 stores will significantly impact Whole Foods' finances, including decreasing cash reserves and inventory. Strict cost management will be needed for the new stores to be successful.

1. Joe Picurro
11/16/16
MKTG300, INFO300
MGMT300, FINC300
Marketing Assignment
1. The 365 store needs to have a much different product offering to consumers than the
typical Wholefoods store. While much is discussed about the demographics more needs
to be talked about the actual 365 stores. A clear a precise strategy, objective, and target
market is needed. To make these stores profitable but to also eliminate competition with
the original Wholefoods stores which would create conflicts within the company. They
have the Wholefoods name but must be branded as something different. Targeting the
missing segments of consumers Wholefoods does not already attract.
These 365 stores create a new strategy and opening for Wholefoods that will target those
with the national medium income or close to it. The Silver Lake area near Los Angeles provides
such a market. There is too much stressed on what seems to be implying a hipster market, it
seems foolish to apply this as a grand Wholefoods strategy for the 365 stores. Instead the
income, health habits, and age of the Silver Lake area should be closely observed. Not the
hipster classification because most of the country is not like that, nor will it provide a strategy for
those in Silver Lake. The overall demographics of this city should be viewed at as positive for a
365 store and can be closely modeled for other possible areas, to build new stores. One big
consideration is that there always will be the unknown consumer, which are those who may shop
at a store such as Wholefoods every so often.

2. The 365 stores may be more appealing to those kind of consumers and therefore, must reflect
a welcoming image for them as well. This is because Wholefoods is looked at as a high class
grocery store, that image stays in consumer’s minds. Making them not even think about
considering to shop there, the 365 stores need to break away from that image. Appealing to all
consumers but primarily focusing on those moderate grocery shoppers discussed. This is another
strategy the VP of marketing needs to take into consideration. This is not just building a new
store these 365 stores must be used to attract a whole other segment of the market. This needs to
be solidified and practiced in order to attract new customers and keep the original Wholefoods
stores as what they are with no conflict of sales.
2. Management will focus on how to better serve the market for the 365 stores, services
such as the restaurant setting should be cut to reduce unneeded staff and spending. This
will help management focus primarily on the products Wholefoods will provide at these
stores creating a more normal shopping setting for customers. Many of the restaurant
services are not needed for these stores. Financing these new stores is a major capital
expenditure. Many resources and budgeting will have to be looked at closely to ensure
these stores are successful. Product costs will cheaper and more will be spent on
advertising and bringing in customers. 365 stores will become more of a cost focus over
building new Wholefoods stores.
The operations will change since new products and services will be used and implemented,
along with cuts in operations for the 365 stores. Such as many of the high end amenities

3. offered by the typical Wholefoods stores. This may require a revised structure for the
management and services provided. Since this is a major investment that needs to be
coordinated throughout all of Wholefoods. Marketing and advertising will now have to
develop a strategy to attract customers, to this new form of the Wholefoods experience.
Reducing the high end services will help with this new market. This completely changes the
objective and focus in a positive way by focusing on providing customers with a product
oriented experience. Operations of these stores will focus on providing cheaper but good
quality products. Instead of having all the extra services provided by a typical Wholefoods
store, this may sound bad but actually is a good thing, and will not reduce the Wholefoods
image. It allows the 365 stores to operate as more of a typical grocery store. Consumers will
get the Wholefoods experience without the extra amenities that they can’t afford or even
don’t care for.
3. Everyone deserves healthy and good quality food at an affordable price. This is why
Wholefoods has developed the 365 line for the health conscious hardworking individual.
The 365 store offers a large array of the best high quality health foods and products not
offered in any other grocery store.
Wholefoods is the premier of certified organic grocery stores. The convenience of all top
quality health and food related products is provided at one place. Wholefoods provides a
passion in every product for healthy lifestyles for all individuals of all needs. A healthy
start, starts at Wholefoods.

4. Finance Assignment #26
1. Looking at Whole Food’s balance sheet for 2015 they have a tremendous amount of cash
and short term investments of $519milliom. They also have a lot of finished goods that
account for all of their inventory $500million. On the income statement sales and
revenues rose in 2015 at $15.39billillion as well as the costs of goods sold at $9.97billion.
Income taxes domestically are also astronomically more than foreign taxes. Referring to
the two items on the balance sheet, inventory and cash make up a huge portion of assets.
Building all of these new 365 stores will most likely knock down cash, and reduce
inventory. Since those resources will be needed to help fund the 365 stores, they will be
impacted greatly for this undertaking.
The income statement is very telling of the costs that go into Whole Foods and its stores.
While the company did make a lot in sales, in just a 4year period from 2011 to 2015, cost of
goods sold has gone up $3.4billion. During the same time sales went up $5.28billion if you
subtract the two the sales really only went up $1.88billion. This is important because it
shows Whole Foods’s gains are only growing slightly costs are going up as fast as they gain.
If this is not mistaken there will be higher costs and less profit in the future. Whole Foods
seems to be a company struggling to maintain their costs more than anything. Building these
new stores will raise all of those costs since it is so expensive for current stores to operate. If
Whole Foods is not bringing in enough profit to balance out the costs and rake in more
revenues. Budgeting for these stores can break this company very fast. This particular

5. balance sheet from marketwatch.com provided the best information since. It was easy to
read by providing summarized balance sheet and income statement information.
2. The financial decisions help keep a company going and effects every aspect of the
company, no money no business. Management needs to take the best course of actions to
provide the company with the best strategy going forward. They help make the decisions
that need to be financed which affects every department and function of Whole Foods.
Even though opening these 365 stores seems to be a risk, management feels taking the
risk. Is the best way to help the company turn around with a new outlook that comes
with the 365 store line. Marketing for these stores will change since Whole Foods is
already planning. On them having a new cheaper product line, that will be focused on
those of the middle class bracket.
This also changes who Whole Foods will market to in order to get these products they wish
to obtain. As well as how the store will actually appeal to this new market, even though they
are trying to attract the middle class market. This does not make marketing and advertising
any cheaper. All the costs are still there and this poses not just a challenge for marketing but
all of operations. Whole Foods must make more drastic financial evaluation of all
operations, marketing, and management decisions before opening all of the planned 365
stores. It is understandable that Whole Foods wishes to attract a new and missing market
since the current market is not doing so well. However, smaller steps should be taken for
opening up all of these 365 stores.

6. Whole Foods should first experiment with maybe one or a few stores before opening, a
bunch at once in a small time frame. However, the absolute first thing they must do is
manage their costs, of the current stores before opening up more stores. The company cannot
afford to skate on by because this will potentially lead to a great loss or financial disaster, in
the future.
3. The following are the formulas for Whole Foods in 9/27/2015. The debt to equity ratio
in millions for 2015 is (3+62)/3769total equity = 0.0017 or 0.02%. Total Current Assets
1544/ Total Current Liabilities1252= 1.23%. The quick ratio is total current assets1544 –
inventory500/ total current liabilities = 0.83%. ROA (Net Income 2015)/ (Total Assets
2014) Total Assets 2015/2= 536/ (5744+5741)/2= 536/5742= 0.0933 = 9.33%. ROE
(Net Income 2015)/ (Total Equity 2014) + Total Equity 2015= 536/ (3813+3769)/2=
536/3791= 14.14%. In 2014 the Whole Foods current ratio was 1.473%, quick ratio
0.75%, ROA 10.26%, ROE 15.06%, debt to equity 0.02%.
The two I determine that will change the debt to equity because the total and long term debt
will definitely change and increase. Due to such a large capital expenditure and the quick
ratio since there will be so much more inventory. This calculation may possibly be negative
and it is already low. Inventory costs are going to sky rocket as well as the current liabilities.
These are extremely important to look at because they seriously take into consideration. The
current and long term effects of budgeting, that need to be monitored very closely.
Managements decisions will deeply impact these ratio and financial decisions, while there
may be some negatives with the 365 store which is not surprising with such a big expense. If

7. management does not monitor its expenses and these ratios carefully. If the negatives will
continue in the long run and Whole Foods can be in some serious trouble with these 365
stores. If they monitor things well with inventory and costs of goods sold instead of all profit
this situation can be improved. Stop & Shop is competitive but Shoprite is more attractive
than both Whole Foods and Stop & Shop. Their ratios especially ROE is very attractive
more than 8% over Whole Foods is a big difference.
4. For the 3year period there was a 540% increase from 2006 to 2009. For the 5year period
from 2006 to 2011 there was 709% increase. For the 10year period from 2006 to 2016
there was a 310% increase. Whole Foods is at a low point over its competitors they went
up slightly but have being dragged down. To date the price for Whole Foods stock is
down. Shoprite is way up; Stop & Shop is hard to find but are showing steady gains
within their subsidiaries. That hold shares in the company.
This company desperately needs a new strategy to bring in new revenue but to also. Gain
control of the costs, looking at Stop & Shop and Shoprite, Stop & Shop being the smaller
grocery store. Both are showing positive or steady gain while Whole Foods keeps dropping.
Having much less of an impact than major grocery stores like Shoprite. Whole Foods does
not have to go to that extent but need to be positive in their own reinforced market.
Management needs to look at this information before fully building the 365 line it may sound
attractive but it’s not clear. These financials show it could be a success or the biggest
blowback for the company. The 365 store needs more analysis than given to succeed.

8. Management Assignment
1. Whole Foods has the strength of having a very positive image. So even though they are
trying to attract a new market segment. Customers who already shop at the original
Whole Foods stores may shop at a 365 store without, thinking twice about it. These also
opens up many new marketing techniques that may allow these 365 stores. To help
Whole Foods as a company offer so much more than their competitors. The threats of
stiff competition such as Shoprite and Stop & Shop. Offering organic produce as well
can be overcome by Whole Foods because they are known as the organic grocer.
Stronger branding and positioning can deeply offset the threats of competition.
The opportunities that come with these stores is to offer more from Whole Foods that was not
possible before. It can be a brand new unique take on grocery stores and cheaper healthy
food shopping habits. The weaknesses of Whole Foods are the cost of these 365 stores.
Gaining control of the costs can really help these stores stay up and running, profitable, and
rebrand the company. This shows a good SWOT analysis will really benefit this new 365
store line but it must be done 110% correctly.
2. a) The financial impact will be impacted greatly this will lower costs of employees
because 1,500 is a large number. This in turn will change operations just as well to make
up for laying off the employees. Systems, technology, research will have to be put in
place which will. Perform those tasks at a lower cost, Whole Foods may then lay off

9. more employees since these. New implementations can actually perform more efficiently
at a cheaper cost.
b) This can be a challenge because the new stores are going to be managed and operated
differently than the original stores. Since these stores seem to apply they are actually
different and will be managed be fest fit their operation needs. This may pose a threat in
the sense that Whole Foods now needs to implement. A new operational strategy for
these stores and will cut back on employees like they did with the original stores. This
may hurt their image by cutting so quickly with the new store line. Even though it may
be needed to cut costs and quite frankly those tasks can easily be replaced. The staff
needed may be helped greatly from this instead of hurt. Costs may go down and Whole
Foods can build on a much cheaper, efficient, and all around better staffing and operating
strategy.
3. Alderfer’s ERG Theory is needed for the success of the 365 chain because even though it
is simple. It covers the mage aspects of human need and motivation and similar to Whole
Foods as of now growth seems to be isolated and that needs to change. The ERG theory
delves into that social desire, interpersonal development. Even though Whole Foods does
this through its products and services. It must first be done through its people, keeping
employees active and happy and avoiding negative feedback. From layoffs may
discourage that motivation. Whole Foods needs to keep those employees engaged in the
product. Without that motivation their brand name goes down with it, especially their
own line of health products.

10. The ERG Theory expands on Maslow’s Hierarchy in terms of relatedness needs,
existence needs, and growth needs. This can be used as a motivation analysis for the 365
stores as well. Do are employee’s feel they relate to our moto and products; do they feel
they exist instead of being in fear of being the next to be cut? If these are met or not how
will this affect the growth of Whole Foods and the spillover effect, for the 365 line.
Interpersonal love, esteem needs are, the lower order are put into the existence needs.
The growth needs however contains both self-actualization and self-esteem needs.
Aldelfer had said that when needs in a higher category are not met then individuals
redouble the efforts invested in a lower category needs. Top management does show
they care about their employees especially with being rated on Forbes 100 as being one
of the best places to work at. This shows employees are motivated and happy however,
top management fails at the growth part. Needs in the higher category are not met in the
company and this is because there doesn’t seem to be any clear. Strategy as of how much
the 365 stores will actually cost, what is their marketing strategy, and what exactly will it
offer. This is why there isn’t a positive growth in Whole Foods and the company is
struggling. Top management needs to use 3 out of 3 of Alderfer’s ERG Theory not 2 out
of 3. They can have all the positivity they want but the company needs growth.

11. Operations Assignment
1. Whole Foods has based its entire process based on all of its products and services not
just a particular item. This unique in its approach because the distribute these
products and provide the services. It wishes to be branded with, this process creates a
brand image of positivity from the process. The design is to develop and meld this
into the company as a whole. This is important especially with the opening of the
365 stores because it seems like Whole Foods. May have to change processes and
designs for these stores that consumers are unfamiliar with.
Whole Foods then took the inputs the sought and put into their own line of health
products. The company’s process is now sustaining this and that is part of their design.
The design for the 365 stores is unclear Whole Foods should not throw away the design
of its original stores. Instead they should take those processes and meld them into the
design of the new stores. Building upon the already positive image of Whole Foods.
2. Managing quality is a huge deal because the expenses for the cost of goods sold for
Whole Foods is problem. The company provides itself on being a certified organic
grocer, taking safer initiatives with their foods. Such an instance was with the price
of salmon, one of the top executives at Whole Foods said. Yea we can sell it for less
but it is safer for the environment if we do it this way. While this is a very general
statement this shows yes anyone wants good quality, and Whole Foods tries to be the
absolute best they can be. Managing quality is a lot harder to accomplish than one
may think.

12. What was discussed before was on the quality of products for Whole Foods.
Stepping away from this Whole Foods promotes a lot of its managing quality through
their services. Such as those discussed on their core values is by providing healthy
eating education. As well as winning partnerships with suppliers to ensure they help
deliver exceptional quality as well. Quality is the biggest cornerstone in marketing
for Whole Foods.
3. The Whole Foods location strategy is to place these new 365 stores in new markets
and around metropolitan areas. These areas are also wealthy and those with middle
class incomes. Stores are still relatively close by and complement instead of drive
business from existing stores. Whole Foods is doing so to increase market share in
that area. Pushing the stores to far apart may isolate those stores providing low
profits. By putting the new stores in wealthy metropolitan areas and suburbs they
attract the entire market area.
This location strategy is about increasing market share, outperforming competitors
instead of other Whole Foods stores. This strategy makes sense because everyone shops
for groceries and there are more than enough people to fill these stores thousands of times
over, even though close by. This will help the community, provide effective marketing,
and bring in profits. Which is a must with these new stores being such a large capital
expenditure.

13. 4. Whole Foods has laid out a strategy that makes them the number one organic grocer
of all grocery stores. They have built this around the company the company making
their stores unique. Whereas Shoprite and Stop & Shop are very similar with some
quality differences. Whole Foods then laid out further strategies of how their store
operates. There’s acts like a restaurant on top of a grocery store. Customers have the
opportunity to shop or dine.
This is a great layout design because people may want to shop and dine or one influences
the other to such a behavior. Whole Foods offer a kitchen sit down experience where
customers can order food and buy groceries with that meal as well. It gives people the
Whole store with a small kitchen experience. This strategy may not fit into the 365 store
since their strategy will be different. However, a new bold layout seems to be a big
promise to consumers for those stores.
5. Whole Foods has a massive supply chain and prides themselves on relationship their
suppliers. Being a global grocery store this task is immense, Whole Foods gets
supplied from suppliers, manufactures, supplements, and in store food making. The
supply chain is one of the most important operations for this company. They are
completely dependent on their products obviously and costs of warehousing. These
products is immense because the company wants to ensure. Quality and products and
inventory are managed correctly. The company has done a great job with this but
needs to lower costs.

14. Appendix
http://performance.morningstar.com/stock/performancereturn.action?p=price_history_page&t=
WFM
http://financials.morningstar.com/ratios/r.html?t=WFM
http://www.marketwatch.com/investing/stock/wfm/profile