Whole Foods Market is a high performing company for four key reasons: 1) its strong brand recognition and excellent shopping experience, 2) its high food and product standards, 3) its focus on private label expansion through new 365 stores, and 4) its continuous new store openings. However, increased competition from other organic grocers and conventional retailers offering organic products at lower prices has led to four consecutive quarters of decreasing comparable store sales and margins for Whole Foods Market. The company faces both opportunities, such as growing global demand for organic food and availability of global supply, as well as threats, including other organic grocers and consumer trends pushing for lower prices.

1. 1
Strategic Analysis
Team Dragon
CSU EMBA Class of 2018
Dave Story
Hyrum Egbert
Megan Manning
Jim Hendricks

2. 2
• Current Performance Analysis and Evaluation
• External Factors Analysis Summary (EFAS)
• Internal Factors Analysis Summary (IFAS)
• Strategic Alternatives
• Implementation Plan
• Results Measurement
Table of Contents

3. 3
Whole Foods Market Current Performance – Key Factors
• Strong brand recognition and shopping experience
• High food and product standards
• Private label expansion
• Continuous new store openings
…which has led to solid financial performance
Whole Foods Market is a high performing company for four key reasons...

4. 4
The Whole Foods banner serves as an
icon for health and quality1
• Whole Foods Market is the largest retailer of
natural and organic foods and was the first
certified organic grocer in the United States1
• Whole Foods Market has a first-mover
advantage in a niche segment of the grocery
market1
The first reason Whole Foods Market is high performing is because of its
strong brand recognition and excellent shopping experience
1. Morningstar Equity Analyst Report, Whole Foods Market, 26 Aug 2016
2. Whole Foods Market 2015 Annual report
3. http://www.fool.com/investing/general/2014/07/14/analyzing-whole-foods-markets-strengths-weaknesses.aspx
4. Credit Suisse August 3, 2016 analyst report
5. https://www.entrepreneur.com/article/224577
The Whole Foods Market experience:
• Large organic selection ~25,000 SKUs2
• Large perishable selection ~66.5% of 2015
sales2
• Appealing stores in premium locations1,2
• Excellent customer service with of full- and
self-service options1,2
• Leading Apple Pay retailer, in both
transactions and sales2
“Whole Foods Market's strength stems from authenticity and a premium shopping
experience as a true organic grocer”3
Selection
Fresh
Quality
Store
Condition
Customer
Service
Shopping
Experience
*****
Broad and deep
assortment of
brands and items
across
categories,
especially
notable in
produce and
seafood.
*****
Produce plentiful,
excellent item
condition. Seafood
freshness and
healthfulness
underscored by
labels and signs.
*****
Stores well-lit,
updated, and well-
maintained with
convenient layout
and modern
fixtures and
displays.
*****
Staff widely
available and
knowledgeable,
in- stock levels
high, no wait at
service counters
and checkout.
*****
Pleasant, enticing
and convenient.
Whole Foods performs best amongst competitors4
The Whole Foods
shopper is slightly
different in that he
or she is driven
more by health and
taste than by price5

5. 5
“Our Standards lead the industry”1
The second reason Whole Foods Market is high performing is its high
food and product standards
1. Whole Foods Market 2015 Annual report
2. Credit Suisse August 3, 2016 analyst report
3. http://www.wholefoodsmarket.com/quality-standards
Highest
quality
products
due to
highest
quality
standards
Body Care Standards
• Bans 50 ingredients
commonly found in
conventional body
care products
• never sell products
tested on animals
• Premium Body
Care™ standards
bans more than 400
ingredients
Seafood
Sustainability
Wild-caught seafood
• Marine Stewardship
• Monterey Bay
Aquarium Seafood
Watch® program
and The Safina
Center
Farmed Seafood
• Responsibly
Farmed
Meat
Standards and
Animal Welfare
Global Animal
Partnership’s 5-
Step® Animal
Welfare Rating
Responsibly
Grown
Introduced
Responsibly
Grown “Good,
Better, Best”
rating system for
produce and
flowers
GMO
Transparency
• Will provide full
GMO
transparency
by 2018
• Currently over
36,000 non-
GMO products
Eco-Scale™
First national
retailer to
launch its own
comprehensive
set of green
cleaning
standards
Whole Foods
commits to new
chicken
standards4
• With Global Animal
Partnership
• Slower growing
breeds
• Less crowding
• Natural light
“Standards
that aren’t
standard
anywhere
else”3
4. http://fortune.com/2016/03/18/whole-foods-new-chickens/
“Broadest and
deepest
assortment of
organic products
and brands”2

6. 6
• “365 Foods” is the private label sold in Whole Foods stores 1
• In 2016, Whole Foods started opening smaller stores that specialize in these less expensive
private-label groceries, called 365 by Whole Foods Market 1
– Makes shopping at the store more accessible to broader markets of multiple ages and incomes 1
– Still the same high quality organic food, just at lower prices 1
– This has caused some cannibalization in sales initially, which is an area of concern 1
– Estimated market share for fresh format/limited assortment is expected to rise, while traditional grocery
store market share is expected to decrease 2
2
The third reason Whole Foods Market is high performing is its focus on
private label expansion with exclusive new “365 by Whole Foods” stores
1. “Whole Foods is Ready to Convince You that It Can Do Cheaper” by Craig Giammona, www.bloomberg.com
2. “Kroger is Whole Foods Greatest Threat” by Ashley Lutz, www.businessinsider.com
Fresh Format
Market Share
Increasing
Traditional
Supermarket
Market
Share
Decreasing

7. 7
The fourth reason Whole Foods Market is high performing is it continues
to open stores in the U.S., Canada and Great Britain
1. http://media.wholefoodsmarket.com/fast-facts/
2. www.wholefoodsmarket.com/stores/list/development
3. Whole Foods Market 2015 Annual Report
Bloomberg 2015
• Whole Foods operates 456 stores in the United States, Canada, and Great
Britain1
– 25 new stores this year, with 12 more expected2
– Over 100 leases for future stores3
– Projecting about 1,200 stores, including the new 365 Foods3
• Expands primarily through new store openings3
• Potentially pursue acquisitions of smaller chains (e.g. Wild Oats)
365 by
Whole Foods Market

8. 8
$-
$100
$200
$300
$400
$500
$600
$700
$-
$5,000
$10,000
$15,000
$20,000
Income(Million$)
Revenue(Million$)
WFM Revenue & Income2,3
Revenue Net Income
These 4 key reasons led Whole Foods Market to solid revenue growth and
profit margins…
1. Whole Foods Market 2015 Annual Report 5. S&P Capital IQ Stock Report, Kroger Co., September 3, 2016
2. S&P Capital IQ Stock Report, Whole Foods Market, August 27, 2016 6. Kroger Co. Qrtrly Press Releases, Q3, Q4 2015, Q1 2016
3. Morningstar Equity Analyst Report, Whole Foods Market, 26 Aug 2016 7. S&P Capital IQ Stock Report, Sprouts Farmer Market, September 3, 2016
4. Whole Foods Market 10-Q, Q4 2015; Q1, Q2, Q3 2016 8. Sprouts Farmers Market Qrtrly Press Releases, Q3, Q4 2015, Q1, Q2 2016
0.0%
5.0%
10.0%
2010 2011 2012 2013 2014 2015 TTM
Percent(%)
WFM Net Profit Margin2,4,5,6,7,8
Whole Foods
Q4 2015 Q1 2016 Q2 2016 Q3 2016
-0.2% -1.8% -3.0% -2.6%
Comparable store sales4
…over the long term, but increased competition and a price reduction strategy
has led to 4 quarters of decreasing comparable same store sales and decreasing
margins2,3
• Consistent long term sales growth
• Revenues from $93 million in FY 1991 to $15.4
billion in FY 20151
• A compounded growth rate of ~ 24% over 24
years1
Whole Foods Market “…superior in-store
experience and reputation for quality,
ultimately giving Whole Foods some
pricing power (as evidenced by high
store productivity and margins).”3

9. 9
External Factors Analysis Summary – EFAS Table
External Strategic Factors Comments/Rationale/Data
Whole Foods Market faces 4 external opportunities and 4 external threats
Opportunities
1. Growing global demand
2. High availability of global
supply
3. Increasing demand for low
cost organic food in the U.S.
4. Demand for prepared foods
increasing
Threats
1. Other organic grocers
2. Low cost providers
3. Consumer trends and
government intervention
4. Economic change
Opportunities
1. Global demand for organic food increasing at a higher rate than U.S.
demand
2. Many large markets for organic food supply outside of the U.S., and
U.S. organic supply growth is not keeping up with demand
3. Growth rate for organic food in the U.S. is more than double the
growth rate of all food, and demand for lower costs is increasing.
4. Fresh prepared food is the fastest growing segment in grocery stores
Threats
1. Sprout’s and Trader Joe’s continue to grow and will provide more
competition
2. Wal-Mart and Costco are growing their organic business
3. Government regulations could cause industry disruptions
4. The economy has a direct correlation with the organic industry
and, in particular, Whole Foods

10. 10
• Global organic food market is projected to
have a compound annual growth rate of over
16% from 2015 – 2020 1
– Drivers include growing health concerns,
increasing awareness of the health
benefits from organic food, increasing
income levels, improving standard of
living, and government initiatives aimed
at encouraging widespread adoption of
organic products
• Currently, Whole Foods has 436 stores in the
U.S. and 20 stores outside the U.S.- 11 in
Canada and 9 in the U.K. 2
– International sales account for 3.3% of
total revenues for the company
– International revenues have a higher
compounded annual growth rate (CAGR)
than the CAGR of U.S. revenues (14.74%
vs. 11.96%, respectively)
The first external opportunity presented to Whole Foods is a growing
global demand for organic food
1. http://www.prnewswire.com/news-releases/global-organic-food-market-to-grow-at-over-16-by-2020-concludes-techsci-research-
523104261.html
2. www.wholefoodsmarket.com/stores/list/development
3. https://www.statista.com/chart/3681/organic-retail-sales-value-by-country/
Currently only operating in 3 of the top
12 country markets for organic food
Global Organic Food
Growth > US Organic
Food Growth
3

11. 11
The second external opportunity presented to Whole Foods is high
availability of global supply
1. http://www.wsj.com/articles/can-organic-food-feed-the-world-1436757046
2. https://www.weforum.org/agenda/2015/08/which-countries-have-the-most-organic-agricultural-land/
3. http://www.businessinsider.com/10-states-consuming-most-of-organic-food-supply-2015-10
• Demand is growing more than supply in the U.S. 1
• In the U.S., 80% of total organic sales were within
500 miles of the farm 3
• It is important to have supply in every market that
retail stores exist
• There are already millions of
small and midsize organic
farms world-wide 1
• Argentina and Australia
currently have more organic
agricultural land than the
U.S. 2
U.S. Demand Growth > U.S. Supply Growth
1
2

12. 12
• Organic food sales continue to grow in
the U.S. at around 10-12% annually 1
– This growth rate is more than double the
annual growth rate forecast for all food
sales
–
• Millennials are a large driver in the
future growth of the organic food
market 2
– Millennials are willing to pay for fresh
and healthy food, and are willing to go
to great lengths to find it
– Millennials have much less brand
loyalty, and want to buy organic food at
the cheapest price they can find
The third external opportunity presented to Whole Foods is an increasing
demand for lower cost organic food in the U.S.
1. http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=59894&ref=collection&embed=True
2. http://www.forbes.com/sites/bethhoffman/2012/09/04/how-millenials-are-changing-food-as-we-know-it/#65166df2339d
Organic food sales growing at
2x the rate of total food sales
Millennials want organic
food, but will buy the
option with the lowest
cost

13. 13
• Customers (Millennials, in particular) are buying more prepared, on-the-go meals for
convenience, but also want fresh, healthy options. 1
– The number of consumers who at least somewhat agree that frozen dinners have little nutritional
value increased 20% over the past 10 years 3
• Prepared food is the fastest growing segment in grocery stores, according to research firm
Datassential. 1
• Fresh prepared foods sales are expected to continue to grow quickly 2
• Over half (57%) of shoppers are currently buying fresh ready-to-eat items 3
The fourth external opportunity presented to Whole foods is an increasing
demand for fast and healthy prepared foods
1. http://www.chicagotribune.com/business/ct-grocery-conference-0622-biz-20160621-story.html
2. https://www.atkearney.com/documents/10192/2916201/Fresh+Prepared+Foods-Cracking+the+Code+for+U+S++Retailers.pdf/aa2a3c6f-1ea1-444d-b22f-bf87c1ab84cb
3. http://www.ift.org/food-technology/past-issues/2015/april/features/the-top-ten-food-trends.aspx?page=viewall
4. http://www.preparedfoods.com/articles/118089-foodservice-vs-grocery-sales
5–6%
3–4% 3–4%
2–3%
0–1%
Sales growth in select U.S. food and beverage segments 2
Retail grocery
food and beverages
Fresh Prepared
Foods
Food service
6–7%
2007-2102
2012-2107
0 20 40 60 80 100
Meal at home
Restaurant meal
Carry-out
Drive-through
Grocery prepared foods
Top 5 Methods of Food
Consumption 4
Percentage
Prepared Food Sales Increasing

14. 14
Product Whole Foods Trader Joe's Difference
Lettuce $1.99 $1.99 $0.00
Yogurt $3.19 $3.19 $0.00
Milk $3.99 $2.29 $1.70
Almond Milk $3.69 $2.99 $0.70
Orange Juice $2.99 $2.29 $0.70
Cheese (Gouda) $5.33 $2.99 $2.34
Sliced Cheese $4.99 $3.99 $1.00
Sliced Turkey $6.99 $3.29 $3.70
Butter $3.49 $2.99 $0.50
Eggs $3.49 $1.49 $2.00
Ice Cream $6.85 $5.99 $0.86
Frozen Broccoli $1.69 $1.49 $0.20
Frozen Pizza $3.99 $4.49 -$0.50
Peanut Butter $2.49 $1.99 $0.50
Almonds $7.99 $6.49 $1.50
Oatmeal $3.19 $2.49 $0.70
Pasta $1.09 $0.99 $0.10
Olive Oil $6.99 $5.99 $1.00
$17.00
Whole Foods vs Trader Joes Price Comparison7
Total Difference
The first external threat facing Whole Foods is strong competition from
other organic grocers
2013 2014 2015
2013 to 2015
% Change
# of Sprouts 167 191 217 130%
# of Whole Foods 367 399 431 117%
Sprouts Sales
(millions) $2,438 $2,968 $3,593 147%
Whole Foods Sales
(millions) $12,917 $14,194 $15,389 119%Sprouts Income
(millions) $51 $108 $129 151%
Whole Foods Income
(millions) $551 $579 $536 -3%
Sprouts vs. Whole Foods Growth Rate4
Sprouts vs. Whole Foods
• BL: Sprouts is growing faster than Whole Foods
• Sprouts is about one half the size of Whole Foods
• Sprouts employs a strategy of lower margins on produce and meat, while
maintaining higher margins on boxed goods2
• Sprouts customers spend $28 per trip on average; compared to $31
from other supermarkets2
• Lower prices are attracting consumers that would otherwise not shop
organic 4
Trader Joe’s vs. Whole Foods
• BL: Trader Joe’s outsells Whole Foods on a store-to-store basis
• Trader Joe’s has 453 stores to Whole Foods 436 U.S. stores
• Trader Joe’s strong sales model maximizes sales per square foot
• Almost double sales/sq. ft. than Whole Foods
• “Whole Foods, whole paycheck” has hurt the retailers image
• Trader Joe’s offers comparable products at lower prices
• Produce products are especially noticeable
Sprouts is growing faster than Whole Foods
Sales per square foot
Trader Joe’s has the industry’s highest
Sprouts is growing sales faster
Sales / Sq Foot 2013 2014 2015
2013 to 2015
% Change
Sprouts $531 $565 $602 13%
Whole Foods $925 $936 $916 -1%
Sprouts vs Whole Foods Sales / Sq Foot
4
Whole Foods made one mistake that blew the door open for competitors: not doing enough to shed its
expensive, “Whole Paycheck” image1
1. http://www.businessinsider.com/whole-foods-biggest-problem-2015-5
2. http://www.bloomberg.com/news/articles/2014-08-20/sprouts-fights-whole-foods-putting-organic-kale-on-sale
3. http://www.fool.com/investing/general/2016/03/25/whole-foods-vs-sprouts-farmers-market-which-is-a-b.aspx
4. http://seekingalpha.com/article/3978549-whole-foods-market-investors-switch-sprouts
5. http://www.businessinsider.com/trader-joes-sales-strategy-2014-10
6. http://www.forbes.com/sites/brandindex/2015/08/06/whole-foods-perception-still-negative-after-overcharging-accusation/#5b5807223a7d
7. http://www.businessinsider.com/i-compared-the-price-of-whole-foods-365-items-to-trader-joes-heres-what-i-found-2016-2/#pasta-23
5

15. 15
The second external threat facing Whole Foods is low cost providers
1. http://www.slideshare.net/SherriHansell/whole-foods-market-brand-audit
2. http://www.takepart.com/article/2015/05/29/americas-new-leader-organics-might-not-be-who-you-think
3. https://www.thestreet.com/story/13398283/1/the-single-biggest-reason-kroger-is-destroying-whole-foods.html
4. http://fortune.com/2015/10/28/kroger-natural-organic-food/
5. Credit Suisse 2 Aug 16 Whole Foods Market Analyst Report
Sam’s and Target
continue to add
organic options to
their grocery lines.
Wal-Mart draws
customers from its
everyday low price
guarantee.
As of 2015, Costco officially
sells more organic products
than Whole Foods. Total
revenue is expected to
exceed $4 billion in 2015. ₂
• Traditional grocery stores are adding more organic
items at a good pace
• Stores offer both organic and non-organic options
• Every Day Low Price retailers, such as Wal-Mart are
creating a greater stir
• Lower costs mean lower margins and profitability
• Provide greater opportunity to sell organic due to
increased visits (they sell everything)
₁
“Whole Food’s price premium
on a basket of items…versus
conventional grocers increased
during the 4th quarter to 29.4%
from 28%...”3
Kroger’s natural
and organic sales
top $11 billion4
5

16. 16
The third external threat facing Whole Foods is consumer trends and
government intervention towards GMOs
1. http://www.wsj.com/articles/organic-vs-non-gmo-labels-whos-winning-1449619118
2. http://sandiegofreepress.org/2012/08/why-a-major-food-organization-is-teaming-up-with-monsanto-and-friends-to-block-your-right-to-know-whats-in-your-food/
Non-GMO products are more
important to consumers than
products being labeled as
organic. Spending on Non-GMO
surpassed organic sales in 2015.
Special interest groups, such as
the Non-GMO project, are trying
to push for labeling
requirements mandated by the
federal government. Several
attempts to vote for GMO
labeling laws have been
unsuccessful, but how long
before that changes?
₁ ₂
• Future costs and availabilities of products could lay in the
hands of the government
• Many are pushing for more government intervention in
labeling requirements
• If government regulations pass, labeling would be
mandated for all non-GMO products
• Mandated labeling requirements would cause price
increases for products
• In addition, production would be reduced and
competition would tighten
• Whole Foods would have to label foods with GMOs or get
rid of them altogether
• Either option would be expensive

17. 17
The fourth external threat facing Whole Foods is economic change
limiting future growth
1. http://www.ers.usda.gov/amber-waves/2013-october/growth-patterns-in-the-us-organic-industry.aspx#.V-H2SygrKhc
2. http://www.bloomberg.com/news/articles/2015-05-14/whole-foods-walmart-costco-steal-growth-in-organic-groceries
₂
₁
• The US economy has a strong correlation with the growth of the
organic market
• During the recession of 2009, dropped from over 15% to
just under 5%
• Whole Foods noticed a stronger decrease in same store
sales
• After the recession, the organic industry has failed to break 10%
growth

18. 18
Internal Factors Analysis Summary – IFAS Table
Internal Strategic Factors Comments/Rationale/Data
Whole Foods Market has 4 internal strengths and 4 internal weaknesses
Strengths
1. Personnel
2. Procurement
3. Management
4. Strategic Planning
Weaknesses
1. Declining Profit Margin
2. Product & Process
Improvement
3. Advertising
4. Pricing
Strengths
1. Whole Foods’ empowered and happy employees increase
productivity and enable high customer service
2. By leveraging its brand name, Whole Foods has a strong
procurement system
3. Whole Foods’ senior executive team has steered the company
with excellent results
4. Whole Foods has an effective growth strategy
Weaknesses
1. Whole Foods store sales are dropping
2. After an inspection, Whole Foods has had several FDA violations
3. Whole Foods lacks recognizable advertising
4. Whole Foods is struggling to price its products effectively

19. 19
We Support Team Member Happiness and Excellence
- Whole Foods Market core value1
Empowered & Self-
directed store teams3
• Encourages competition and
collaboration
• Set sales, growth, and
productivity goals
• Final say in new hires
The first internal strength for Whole Foods is their empowered and happy
employees
Whole Foods Market
employee happiness
Egalitarian culture1
• Financial transparency &
Executive pay capped at 19
times average worker salary
• Gain sharing awards and
benefits
Mission aligns
with personal
beliefs2
1. Whole Foods Market 2015 Annual report
2. Fortune’s 100 Best Companies to Work For 2016, http://fortune.com/best-companies/whole-foods-market-75/
3. Whole Foods Case Study: A Benchmark Model of Management For Hospitality http://www.hospitalitynet.org/news/4059396.html
4. In her book “Make More Money by Making Your Employees Happy.” Dr. Nelson cites a study from the Jackson Organization, a survey research consultancy
5. How to Increase Productivity by Employee Happiness, http://www.forbes.com/sites/martinzwilling/2014/12/02/how-to-squeeze-productivity-from-employee-happiness/#3fc187df1de5
Whole Foods Market has been one of Fortune Magazine’s “100 Best Companies to
Work For in America” 19 years straight, and one of only 12 companies to make the
“100 Best” list every year since its inception.1,2
Happy Employees = Better
Customer Service
Whole Foods believes full-time
voluntary turnover “is very low for
the food retailing industry and allows
us to better serve our customers”1
Happy Employees = Productive Employees
•“Companies that effectively appreciate employee value enjoy a return
on equity & assets more than triple that experienced by firms that don’t.
When looking at Fortune’s ’100 Best Companies to Work For’ stock
prices rose an average of 14% per year from 1998-2005, compared to
6% for the overall market.”4
•“…big value from happy employees…an analysis of hundreds of
studies showing an average of 31% higher productivity, 37% higher
sales, with creativity three times higher.”5

20. 20
The second internal strength for Whole Foods is its strong local, regional,
and national procurement system
1. Morningstar Equity Analyst Report, Whole Foods Market, 26 Aug 2016 4. https://www.entrepreneur.com/article/224577
2. Whole Foods Market 2015 Annual report 5. https://www.thebalance.com/melt-organic-knows-how-to-sell-to-whole-foods-1326331
3. www.wholefoodsmarket.com
“…Whole Foods has ample negotiating leverage since its brand equity, and not that of a
supplier or a supplier's product(s), is the primary driver of traffic and excess returns.”1
National and Regional Procurement
• “The majority of procurement…(in order)
to maximize volume discounts and provide
fresh food”1
– United Natural Foods, Inc. (UNFI) is largest
supplier1
• 32.0% of 2015 total purchases 20152
• Long-term distribution agreement through 20252
“Commitment to Local” Procurement2
• Over 6,500 local vendors3
• About 24% of produce2
• Actively seeking and supporting local
vendors to diversify supplier base1,2
– Local foragers across nation3
– Local producer loan program dispersed $18M
to 235 locals producers since 20072,3
– Must meet Whole Foods’ quality standards2,3
To some
entrepreneurs,
the ultimate
accomplishment is
snagging a spot
on the shelves of
Whole Foods
Market4
For producers,
“Whole Foods is
perceived as the
"Holy Grail" in the
natural foods
business.”5

21. 21
Morningstar assigns Whole Foods an Exemplary
stewardship rating1
• Management's capital-allocation policies1
• The firm has been able to reinvest cost savings into lower
prices, which improve its price perception1
• Wild Oats acquisition has proved to be value-accretive to
shareholders1
• Management's decision to pilot a small-store concept…is
prudent because the firm must address competition from low-
priced competitors1
The third internal strength for Whole Foods is its strong senior executive
team
1. Morningstar Equity Analyst Report, Whole Foods Market, 26 Aug 2016
2. Whole Foods Market 2015 Annual report
3. http://www.hospitalitynet.org/news/4059396.html
4. http://www.statesman.com/news/business/employment/at-whole-foods-team-management-goes-all-the-way-to/nRyBq/
“…a tightknit team of five
senior executives have
functioned as a sort of CEO
committee, collectively
making decisions on
strategy, finances and other
company matters…their
style of leadership is an
outgrowth of the company
culture…” 3
Whole Foods Egalitarian company culture exemplified
by management
• Senior executive compensation is below traditional grocery
operator industry peers, despite much better performance. 1
• In 2007, Mackey voluntarily reduced his annual salary to $1 and
elected to forgo any future bonus and stock option awards. 1
• For the other senior executives, annual salaries are capped at
19 times the company's average annual wages. 2
“…if we want to
optimize trust then
we must optimize
transparency” 4 –
Co-CEO Mackey
Whole Foods is an example of Conscious Capitalism
“Whole Foods has inspired the Collective Management thesis, and practice…”3

22. 22
Measurable progress on strategic initiatives1:
• Instacart partnership offering fresh grocery delivery to more U.S. homes than any other food retailer
• Leading Apple Pay retailer, in both transactions and sales
• Implementation of Workday for online HR management
• Initial rollout of our new, unified point of sale system
• Pilot of our Affinity program in Philadelphia
The fourth internal strength for Whole Foods is its effective strategies
1. Whole Foods Market 2015 Annual report
2. http://www.fool.com/investing/2016/09/09/back-to-school-with-return-on-invested-capital-101.aspx
3. http://www.wsj.com/articles/whole-foods-works-to-reduce-costs-and-boost-clout-with-suppliers-14
4. http://www.wsj.com/articles/todays-top-supply-chain-and-logistics-news-from-wsj-1455621553
5. http://fortune.com/2015/10/14/whole-foods-retail-software/
Supply Chain Efficiencies: In progress
Consolidating 12 cumbersome inventory-
management systems into one3
• Cloud-based system will
– Automate item tracking, re-stocking, ordering3
– Enable traceability of product3
– Centralize some product decision making to lower
costs4
• Meat and eggs procurement decisions already
centralized3
• BL: Supply chain management will leap-frog
competition5
Our strategy revolves around leading a race to the top in terms of a differentiated
customer experience: continuing to raise the bar on quality and selection, providing new
levels of transparency and accountability, and leveraging technology to deliver an
improved shopping experience.1
Growth Strategy: Effective
To ensure continued growth and to address
competitive environment, added:
• Value strategy: Price reduction strategy to offset
competition in organic food1
– Hurting margins in short term to retain market share1
• New store format: Makes sense from a capital
and high ROIC (~13%) perspective2:
– In house brand offers competitive pricing
– Smaller footprint allows openings in more locations
– Cheaper to build & maintain than current stores
– Effective replenishment technology enables less labor
Pricing and convenience
• Launch of our new mobile app
• New capital allocation strategy
• Introduction of a new labor scheduling tool

23. 23
• So far for 3rd Quarter 2016, store sales are down 2.4%1
• In 2015, Whole Foods sought to cut 1,500 jobs in order to bring down costs2
– Jobs that were being cut were regional and store positions
– No positions within Headquarters were eliminated
• In an effort to reduce prices, as competition has increased from other
grocery stores, Whole Foods Market has offered discounts, slashed prices, and
perhaps launching a pilot loyalty program1
– Loyalty Program would create 10% discount on its "365" private-label brand items.3
The first internal weakness facing Whole Foods is recent declining profit
margins
• http://wwwwsj.com/articles/whole-foods-profits-falls-sales-slip-1469656674
• http://www.wsj.com/articles/wholefoods-to-cut-1-500-jobs-1443442644
• http://www.fool.com/investing/general/2013/12/23/3-potential-strategy-tweaks-for-whole-foods-in-201.aspx
Whole Foods Market is
slashing prices to more
effectively compete with
other grocers.

24. 24
• In February 2016, the FDA found "serious violations" in a Whole Foods
Market food manufacturing facility in Massachusetts2
– "Your firm failed to manufacture, package, and store foods under conditions and controls
necessary to minimize the growth of microorganisms and contamination as required by 21 CFR
110.80 (b)(2).“1
– "Your firm failed to maintain equipment in an acceptable condition through appropriate cleaning
and sanitizing as required by 21 CFR 110.80(b)(1)."1
– "Your firm failed to sanitize and thoroughly dry, prior to use, food-contact surfaces which have
been wet cleaned as required by 21 CFR 110.35(d)(1)."1
– "Your firm failed to take proper precautions to protect food and food-contact surfaces from
contamination with chemicals, filth, and extraneous materials due to deficiencies in plant design
as required by 21 CFR 110.20(b)(2)."1
– "Your firm's hand-washing facilities lack running water of a suitable temperature as required by
21 CFR 110.37 (e)."1
– "Your firm failed to properly identify toxic sanitizing agents in a manner that protects against
contamination of food as required by 21 CFR 110.35 (b)(2)."1
The second internal weakness facing Whole Foods is FDA violations
• http://www.fda.gov/ICEEI/EnforcementActions/WarningLetters/2016/ucm506089.htm
• http://www.wsj.com/articles/whole-foods-must-clean-up-its-act-fda-says-1465936379
Whole Foods had 6
serious FDA violations

25. 25
• While Whole Foods Market does utilize a brand campaign, it is not widely
known or recognized. Whole Foods partnered with Partners & Spade, a New
York-based company1
– Launched in 4th Quarter 2014, their advertising theme is “Values Matter”. Primarily
digital ads, television, and print. Ads seek to focus on the impact and origins of the
company’s products along with the standards behind them. 1
• Television ads targeting mainly prime time and late night television shows
such as “Modern Family” or “Saturday Night Live”
The third internal weakness facing Whole Foods is a lack of recognizable
advertising
1. http://media.wholefoodsmarket.com/news/whole-foods-market-launches-first-ever-national-brand-campaign
Whole Food's Market's
advertising theme is
"values matter",
emphasizing the
company's high standards.

26. 26
The fourth internal weakness facing Whole Foods is its high product
pricing
• http://www.fool.com/investing/general/2014/07/14/analyzing-whole-foods-markets-strengths-weaknesses.aspx
• http://www.fool.com/investing/2016/08/31/will-whole-foods-markets-new-loyalty-program-make.aspx
• http://www.businessinsider.com/whole-foods-prices-compared-to-kroger-2015-11
- Whole Foods Market has taken strides to counter
their “whole paycheck” reputation, but they’re still
suffering from their 3rd consecutive quarter of declining
same-store sales.1
- Management has admitted they’ve invested in the
wrong mix of products and as a result, were forced to
decrease their gross margin expectations from 36.4%
to 34-35%.2
Whole Foods has
reduced the gap in some
of their products pricing.
Whole Foods vs. Kroger
Basket Cost Comparison3

27. 27
Potential Strategies
and
Recommended Strategies

28. 28
Potential and Recommended Strategies, and a ‘Wild Idea’
Based on the EFAS and IFAS analyses, we have identified 15 potential
strategies and a ‘wild idea’…
1. Expand stores into Western Europe
2. Expand supply/stores into Australia
3. Increase amount of 365 stores in downtown
areas
4. Focus on healthy fully prepared foods in 365
stores
5. Daily ready to cook meals (all fresh
ingredients with recipe)
6. Improve customer loyalty program
7. Expand targeted advertising audience
8. Host proper food preparation classes
9. Host healthy cooking classes
10. Centralize some purchasing decisions
11. Marketing campaign highlighting product
differentiation
12. Marketing campaign highlighting local products
13. Marketing campaign highlighting organic and non-
GMO selection
14. Gas station/convenient store
15. Offer free personal shopping assistant for first
couple visits
16. Wild Idea – Deliver food and meals via drone
…and we recommend 4 of these strategies for implementation

29. 29
Key Components - Ready to Cook Fresh Meals
• Recipe and all fresh, organic ingredients ready to cook in one convenient
package
• Ready for easy pick-up in all stores (Regular and 365 Stores)
– Especially targets Millennials / young professionals who can pick up meals quickly
on their way home from work
– Each meal feeds 2 people
• Different meal every day
– Vegetarian and Paleo recipe versions available
• Recipes crafted by experienced chefs, specifically hired by Whole Foods for
the meal plan service
– Key focuses include taste, nutrition, variety and short prep-time
• Short meal preparation times (30 minutes or less)
• No commitment or membership, can use the service on an as-needed basis
The key components of the ready to cook fresh meals strategy include
meal of the day options and are ready to pick up in stores

30. 30
Benefits:
• Capitalizes on the growing market for prepared
foods and fast, fresh organic meal options
• Already have the food supply and distribution
in place, which could give them price and
supply chain advantages over competing meal
services
• High quality and brand recognition will give
them a competitive edge
• No delivery fees will keep costs lower
• Less wasteful than other services
– Extra ingredients from the day can be re-used in
future meals
– Customers will use on an as-needed only basis,
and won't get a set amount delivered weekly to
their house, which they may not end up making
– Less packaging waste than current meal services
in the market
…which present several benefits and risks to Whole Foods Market
Risks:
• Increasing competition in this area of business
• Pressure to provide low prices
– Many existing competitors do not provide
100% organic ingredients or very high
quality ingredients, allowing for lower, more
attractive price
• May require increasing the amount of stores
(especially in/near downtown areas) to
increase coverage of the service
Key Benefits and Risks - Ready to Cook Fresh Meals Strategy

31. 31
Key Components of improve customer loyalty program
• Featured items on sale every week and every day
– Vitamins & supplements, meat & seafood, produce
• Customers can shop at either Whole Foods Market or 365 stores
• Customers must download the app to receive current sales and deals
– App will target items which the customer frequently purchases for sales
• No fee for enrolling in the loyalty program or app
• Increase same-store sales
• Capitalize on customer loyalty by personalizing the shopping experience
The key components of the improved customer loyalty strategy includes a
mobile app and real time alerts to customers about current sales

32. 32
Benefits:
• Attract new customers, who might
otherwise avoid Whole Foods
• Reward existing customers and
encourage continued shopping
• Generate increased data for Whole
Foods about their customers likes
and dislikes
– Whole Foods will see which
promotions are effective and which
aren't
• More personalized shopping
experience for all customers
• Inexpensive to implement
• Increase same-store sales
…which present several benefits and risks to Whole Foods Market
Risks:
• Many competitors already provide
lower costs on similar products
• Would require customer to use app
to receive discounts and earn their
rewards
• Will be more complicated than
setting uniform sale prices
Key Benefits and Risks of improve customer loyalty program

33. 33
Key Components of gas station/convenience store
• Gas stations will cater to alternative fuels such as electric, natural gas, and
hydrogen
– Moderately high margins from the early adoption of alternative fuels will help
establish profitability and help pay down debt for brick and mortar locations
• Ethanol fuel (sold as E85, etc.) will be offered to draw in as many clients as
possible
• Convenience store will take on a healthy alternative
– Organic snacks and foods will be sold throughout the store
– Cold and hot beverages will be offered (organic teas, coffees, sodas, and beer)
• Ready to Cook (RTC) meals will revolutionize the way meals are prepared for
healthy adults
– An assortment of RTC meals will be available at the convenience stores
• The meals will be delivered from stores daily
– Customers will be able to customize dinners from their computer
• Customized meals will be sent to the gas station for retrieval.
The key components of the gas station/convenience store strategy
include alternative fuels and ready to cook meals

34. 34
Benefits:
• Early adoption – quicker ROI than
traditional brick and mortar stations
• Boost image as true all-natural
supplier
• Cater to most vehicles, which will
bring prestige
• RTC meals will provide a strong
revenue stream
– Will bring others to stores through
RTC program
• High snack and beverage prices will
help fund store ROI
• Greater customer loyalty through
fuel points
…which present several benefits and risks to Whole Foods Market
Risks:
• High startup costs
• Adoption phase could be slower
than anticipated
• RTC meals might not catch on
• Snack foods and beverages sales
could be lower than normal
convenience stores
– Healthier people might not be impulse
buyers
• Economic downturn could cause a
slow in spending
– In turn, sales of new cars and those
that utilize alternative fuels could
slow
Key Benefits and Risks of gas station/convenience store

35. 35
Key Components of Strategy deliver food and meals via drone
• Customers order online, mobile phone is preferred method
• Drone delivers to customer’s home or direct to mobile phone location
• Fast delivery, 30 minutes or less for meals 1 hour or less for groceries
• Meals can be ready to eat or ready to cook
• Deliveries can weigh up to 55 lbs.
• Drones via 3rd party (Instacart) or in house. If in house:
– Relatively low-cost/low-maintenance fleet
– Battery powered drones emit no exhaust
– No manpower dedicated to driving vehicles
• Customers liberated from tipping
The key components of the deliver food/meals via drone strategy include
easy, fast and environmentally friendly delivery

36. 36
Benefits:
• Increased sales of high margin
prepared meals
• Consistent with customer store
experience
• Consistent with environmentally
friendly culture
• Lower total shipping costs than
currently (Instacart)
• Customers greater than a few miles
from store more likely to use drone
than competitor for small purchases
• Positioned to grow share of grocery
delivery market in established
markets
…which present several benefits and risks to Whole Foods Market
Risks:
• Federal, state and local regulations
• Damage Instacart relationship with
its market penetration
• Customers lose touch with in store
experience
• Fewer impulse purchases
• Liability associated with drone
crashes
• Losses due to cyber and physical
attacks
Key Benefits and Risks of deliver food and meals via drone

37. 37
Ready to Cook Meal - Action Plan and Costs
The ready to cook meal strategy will take 18 months and cost
approximately $7.7m to implement…
Item Description Item Owner Duration Units Start Date End Date Estimated Cost Reference
Establish team for research and implementation CMO 3 Months 1/1/2017 4/1/2017
- Six members to perform research on an ongoing basis 12 Months 1/1/2017 1/1/2018
- 6 members at ave salary of $75k, 3 hrs daily, $675 per day 12 Months 1/1/2017 1/1/2018 $168,750
- Employ consulting firm to conduct surveys CMO 3 Months 2/1/2017 3/1/2017
- Average cost of each survey = 10,000, 5 surveys 3 Months 2/1/2017 3/1/2017 $50,000
Create development team to report to COO COO 1 Months 1/1/2017 2/1/2017
- Hire full-time Chef to develop recipes 1 Months 1/1/2017 2/1/2017
- 1 full-time chef at $57,000 annually 1 Months 1/1/2017 Ongoing $57,000 Website 1
- Hire a full-time dietition with specialization in organic 1 Months 1/1/2017 2/1/2017
- 1 full-time Dietition at $67,000 annually 1 Months 1/1/2017 Ongoing $67,000 Website 2
Lease test kitchen for R & D COO 12 Months 2/1/2017 5/1/2017
- Maintain kitchen, utilities, etc. 12 Months 2/1/2017 5/1/2017 $120,000 Website 3
Marketing team to establish advertising program CMO 3 Months 5/1/2017 8/1/2017
- Local TV ads, 3 ads/wk, 3 months, $5,000/ad 3 Months 5/1/2017 8/1/2017 $180,000 Website 4
- Internet ads, $1.50 pay/click, 3 months, $5,000 per month 3 Months 5/1/2017 8/1/2017 $15,000 Website 5
IT for App and Website upgrade CIO 12 Months 2/1/2017 Ongoing
- IT to establish online ordering for customizable meals and interactive recipes 12 Months 2/1/2017 Ongoing
- 4 IT personell at $85k, 8 hrs, 6 mo, $1,360 per day 6 Months 1/1/2017 6/1/2017 $170,000
- 1 Videographer for interactive recipes videos at $41k, 4 hrs, 3 mo, $680 per day 3 Months 1/1/2017 4/1/2017 $5,125 Website 9
- IT for App to establish reward program and in store purchase 3 Months 2/1/2017 5/1/2017
- 2 IT personell at $85k, 4 hrs, 3 mo, $680 per day 3 Months 2/1/2017 5/1/2017 $21,250
Store Operations include one person for packaging of goods COO 3 Months 8/1/2017 Ongoing
- Implementation will start in 20 traget stores 3 Months 8/1/2017 11/1/2017
- One employee at $9/hr, 4 hrs, 20 stores, $720/day 3 Months 8/1/2017 11/1/2017 $60,480 Website 6
Reporting and Analytics CFO 12 Months 7/1/2017 Ongoing
- 1 analyst to run reports on performance to goals (revenue, turns, etc.) 12 Months 7/1/2017 Ongoing
- Analyst salary $55k, 4 hrs/wk, $125 per day 12 Months 7/1/2017 Ongoing $55,000 Website 7
- Reports will be used to monitor weekly and monthly ROI 12 Months 7/1/2017 Ongoing
After test is completed and if results are favorable, presented to CEO for approval CMO/CFO/COO 1 Months 11/1/2017 12/1/2017
Expansion of program to all domestic stores 12 Months 12/1/2017 Ongoing
Continue aggressive marketing compaign CMO 7 Months 12/1/2017 6/1/2018
- National TV ads, 3 ads/wk, 3 months, $112,000 7 Months 12/1/2017 6/1/2018 $4,032,000 Website 8
- Internet ads, $1.50 pay/click, 3 months, $5,000 per month 7 Months 12/1/2017 6/1/2018 $15,000 Website 5
Store Operations include one person for packaging of goods COO 12 Months 12/1/2017 Ongoing
- One employee at $9/hr, 4 hrs, 431 stores, $25,860/day 12 Months 12/1/2017 Ongoing $5,647,824 Website 6
Total $10,664,429
1. http://www.payscale.com/research/US/Job=Executive_Chef/Salary
2. http://www.nutritionist-world.com/nutritionist_salaries.html#texas
3. http://smallbusiness.chron.com/estimated-cost-commercial-kitchen-small-business-74630.html
4. http://smallbusiness.chron.com/much-television-advertising-really-cost-58718.html
5. https://www.hochmanconsultants.com/cost-of-ppc-advertising/
6. http://www.payscale.com/research/US/Job=Retail_Sales_Associate/Hourly_Rate
7. http://www.payscale.com/research/US/Job=Data_Analyst/Salary
8. http://adage.com/article/news/costs-ad-prices-tv-mobile-billboards/297928/
9. http://www.payscale.com/research/US/Job=Videographer/Salary

38. 38
Ready to Cook Meal Strategy - Key Implementation Considerations
• Customer Survey considerations
– What company should we use for survey and demographic information?
– Should we test more than taste preferences? Delivery preferences? Prep-time preferences?
– How will we evaluate and respond to customer feedback?
• Process considerations
– Delivery
• Should we add delivery options on top of in-store pick-up once the strategy gains
momentum? If so, what would the additional costs for packing and shipping be?
– Product Procurement
• Need to continue to support quality and “buy local” initiatives for all ingredients
– Packaging
• Cost of different packaging methods
• Use sustainable and recyclable packaging in line with Whole Foods' values
• As demand grows, will we need to hire more employees to assist with packaging?
– Technology
• Website and App enhancement for meal ordering, incentive program and interactive recipes
• Facility considerations
– Will we need more space for storage, pick-up and displays?
– What pick-up location makes the most sense (i.e. self-serve display, prepared food counter)?
…and there are several key implementation considerations that must be
addressed for the ready to cook meal strategy to be successful

39. 39
Ready to Cook Meal Strategy -
Financial and Customer Measures
Success of the ready to cook meal strategy will be assessed through
financial and customer measures…
1. Whole Foods Annual Report 2015
2. http://www.businessinsider.com/whole-foods-foot-traffic-falls-2016-5
3. https://www.wholefoodsmarket.com/wfm-rewards
Measurement Area Baseline Target
Financial 1 • Increase Revenue from $15.4b (2015) 1
• Increase Net Income from $536m (2015) 1
• Increase Total ROIC from 13.45% (2015) 1
1 Year Target
• Increase Revenue by 4% ($15.9b)
• Increase Net Income by 3% ($552m)
• Increase Total ROIC to 15.0%
Customer 2,3 • As of 2q16, store transactions are down
2.1%, the third consecutive quarterly decrease
in transactions2
• Whole Foods does not currently have a
mechanism to track Brand Loyalty3
• Whole Foods Rewards in in pilot test3
• Add meal reward incentive tied to App4
• Add in store purchase capability to App4
• Track impulse purchases associated with
meal pick up
• Increase transactions 4%
• Transaction reports reviewed
monthly by store
• Repeat shoppers increased 10% in first
year
• 20,000 app downloads
• Online/App meal orders 30/day per
store
• 50 customers per store actively
using meal reward incentive
• 10% of mobile payments via App
• Impulse purchases average $5 per
meal pick up
4. http://www.wholefoodsmarket.com/apps

40. 40
Ready to Cook Meal Strategy -
Business Process and Innovation and Learning Measures
…as well as through business process, and innovation and learning
measures
1. Whole Foods Annual Report 2015
2. www.wholefoods.com
3. http://www.wholefoodsmarket.com/apps
Measurement Area Baseline Target
Business Process1,2,3 • 456 stores globally, with 38 new store
openings in 2015 & 30 in 20161
• Website offers limited ordering and non-
interactive recipes2
• App offers coupons, non-interactive recipes,
and shopping lists2,3
• App does not allow in store purchases or
meal selection3
• Website and App do not track meal
purchases for incentive2,3
• Website and App have no interactive
recipes2,3
• Increase new store openings to 45/yr
• Including main and 365 stores, with
a focus in 365 stores
• Website hits increased 10%
• Online meal ordering available
• 8 new interactive recipes monthly
• Accessed 50% more often
• App allows in store payment and tracks
meal incentive program
• 75% of ready to cook meals
purchased via App
• 10% of mobile payments via App
Innovation and Learning Factors limiting innovation and learning:
• Prepared Food teams success/
complacency
• No customer satisfaction assessment tool
• No customer loyalty program
• Customers demanding lower priced
products
• Limited marketing
Focus on the following key initiatives to
sell ready to cook meals:
• Prepared Foods teams 100% trained:
• Add RTC meal product line
• Meet RTC meal demand
• Customer product feedback via
Website/App star rating
• RTC meals, recipes, etc.
• Customer loyalty program w/incentives
• RTC meal metrics
• Coupons and rewards
• Targeted marketing

41. 41
The projected ROI of the ready to cook meal strategy is 200%
488
40
19,520
$20
$390,400
15%
$3
$58,560
$21,374,400
$10,664,429
200%
Average margin per meal
Number of Stores (2017 estimate)
Daily number of meals per store
Total meals per day
Average revenue per meal
Total revenue per day
Total margin per meal
Total daily margin
Annualized total margin
Total Cost of Implementation
Return on Investment