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Whole oods Marke
Submitted To: Dr. M.R. SureshSubmitted By: Kavita Mary Th
Krishna KumarMadhulika (130Tariq Bin ReyaSudan Gurung Priyankar Das D
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Case BackgroundAbout Whole Foods Market
Started an organic foods store, SaferWay Natural Foods,in 1978, John MLawson Hardy (Hardy), in Austin, Texas.
Later approached owners of Clarksville Natural Grocery owners Craig Skiles to form, WholeFood Markets
A 3,000 square foot store, sold organic food and groceries. The store alsorestaurant.
The time when consumers had started becoming concerned about the useadditives in food products
Mackey and his partner had no business training, in the end of the first year
The first retailer to adopt a supermarket format for selling natural and organ
Faced competition from local farmers' markets, which were very popular wfresh produce.
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Growth through differentiation
Unique value proposition - a retailer committed to norganic foods and environment
Set it apart from other natural foods retailers who could not
match WFM's size and scope
WFM's motto "Whole Foods - Whole People - Wholreflected its social responsibility and business objectives
Culture as a Source of Competitive Advantage- WFM wfor its strong employee-oriented work culture, which em
teamwork, autonomy, empowerment, and transparency.
Freshly prepared by chefs on site, shoppers are tempted barray of both looks and smells. With onsite sushi bars, br
pumping out pizza, salad bars, deli sandwiches, and coffee was difficult not to be impressed and persuaded
Store ambience and customer experience
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Quality
WFM had a strict standard for products that carrie
stores
and prepared internally e.g. baked food usedunbleached and unbromated flour
Buyers to ensure products carefully before purchase
Labeling for all products that contained genetically mingredients
Ensured its product were wholesome and natural
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Financial Analysis
Company had a CAGR of around 32% between 1997200
Had sales growth of 12.8% where as Wild Oats Market aro
Sales per Sq ft @ $800 while others clocked around $400 p
Net Profit Margin
Was stable throughout all 9 years, Industry profit took a divefinancial crisis 2008-2009
It surpassed Walmartsnet profit margin in 2012
Financial Leverage
Debt free since 2009 when it eliminated $748 million
Debt-Equity0.36 VS 2.678 Industry Average
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Ratio Analysis2009
2010
2011
2012
2013
2014
Current Ratio
1.54
1.55
1.65
2.15
1.8
1.39698
Debt/Equity 36%
21%
1%
1%
1%
1%
Days of Inventory
22
20
18
17
17
17
Inventory Turnover
17
19
20
21
22
24
Current Ratio on gradual incline indicating cash and Receivables are sufficient to cocurrent liabilities
Debt/Equity Ratios shows debt averaging 29% of the equity stake in assets than decrthan 1%Days of Inventory Shows 19 days on average sale ofinventoryInventory Turnover Shows consistency in monthly average to sell merchandiseinventory
Operating Data
Number of Stores atEnd of the Fiscal Year
284
299
311
335
362
399
Avg store Size (gross
square footage)
37000
38000
38000
38000
38000
38000
Av weekl sale er
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% Change in Revenue
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Competition
In 2008, sales dropped below 10.91 percent with the newl
acquired Wild Oaks whose sales only rose about 0.8 perceversus 8.2 in 2007.
Entering of Tesco subsidiary Fresh and Easy Neighbourhogrocery and naturals market may oversaturate market and down whole Foods growth in the Organic and Natural Foo
market.
Whole foods will need to spend more in advertising to crehealth awareness and educate consumers on the consequeneating environmentally unsafe foods.
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Controversy
It was labeled as the Whole Paycheck by its detractors bec
its products were overpriced.
The rent at the store at the Time Warner center was $450 pft which was high
They did not disclose the rent structure as well.
They betrayed their principles by selling non-vegetarian fo
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Criticism
High profit due to the premium prices.
High maintenance of store ambience and transferred costscustomers.
The possibility of the stores carrying meat, wine and non-organic foods.
Vegetarians5% of US population.
Vegans25 to 30% of Vegetarians.
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HR@WFM
Decentralization Localizing Operations
Transparency - Financial Information
Competition Teams, Stores, Regions
Gain Sharing Performance Based Pay
Recruitment Hiring Vote
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Theatre 2Reengineering the Value chain
CSR activities that are intended tobenefit the companys bottom line, aswell as the environmental or socialimpacts of one or more of the companysvalue chain partners, which could be:
Supply chain
Distribution channels
Production/Operation
Conscious Capitalism versus CorporateSocial Responsibility
http://localhost/var/www/apps/conversion/tmp/scratch_4/It's%20Not%20Corporate%20Social%20Responsibility%20-%20Company%20Info%20-%20Whole%20Foods%20Market.mp4http://localhost/var/www/apps/conversion/tmp/scratch_4/It's%20Not%20Corporate%20Social%20Responsibility%20-%20Company%20Info%20-%20Whole%20Foods%20Market.mp4http://localhost/var/www/apps/conversion/tmp/scratch_4/It's%20Not%20Corporate%20Social%20Responsibility%20-%20Company%20Info%20-%20Whole%20Foods%20Market.mp4http://localhost/var/www/apps/conversion/tmp/scratch_4/It's%20Not%20Corporate%20Social%20Responsibility%20-%20Company%20Info%20-%20Whole%20Foods%20Market.mp4http://localhost/var/www/apps/conversion/tmp/scratch_4/It's%20Not%20Corporate%20Social%20Responsibility%20-%20Company%20Info%20-%20Whole%20Foods%20Market.mp48/10/2019 Wfm Final Latest
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Key Differences
CSR Conscious Capita
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Building tomorrows Opportunity
Clean technology
Engaging
external
constituencie
Nurturing of
internal
capabilities
Managing todays business
Bottom of the Pyramid
Pollution prevention Product stewardship
Stuart Harts Model for Sustainability
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Q1. WFM was one of the fastest growing profitable retailers in US. What were the reaso
companys growth and profitability? Do you
company has managed to differentiate itself s
from its competitors?
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What Was the Companys reason for growth &profitability?
Growth
OrganicGrowth
InorganicGrowth
Differe
Cusorien
Cu
Qu
Stan
Indgro
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Industry growth
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Has WFM differentiated sufficiently fromcompetitors?
YES!
Drivers of growth
Whole-foods, Whole-people, Whole-Planet
Organizational culture
Size and Scope
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Q2. There were large variation in the prices charged
store in different regions. Additionally WFM was also scritically referred to as the whole pay check for its
pricing strategy. Do you think that company justified in
a premium? Do you think WFM can or should continu
strategy of premium pricing considering the i
competition in the natural and retail food industry?
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Was the company justified in charging a premium?
The company has been catering to well educated, socially awareresponsible customers with a range of Value for Moneyproduc
Good quality & more nutritious products when compared to com
Should WFM continue with premium pricing?
Yes, It has been working well for the company
For the future
Wait till it saturates the chunk of upper-middle class populati The company can start a Loyalty program instead of lowering
altogether
Provide discounts
Stores in shopping malls
Cut costs
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Q3. What are WFMs main strengths and weaknstrategy should company adopt to propel its growth in
If the market saturation is a threat for the company
tackle it? Also, can you think of any other products
can diversify into?
M k i Mi
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Marketing Mix
Product
Organically grown Food
No artificial preservatives, flavourings or sweeteners
Sourced through local traders and producers
Promotion
-Word of mouth
-Brochures accompanying products
-Employees come up with new ideas based on the allocated
M k i Mi
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Marketing Mix
Price
Premium price
Store cost and rent transferred to customers
Value for moneyLess wastage
Place Huge stores built with natural materials
Renewable source of power used
Stores across US, UK, Canada
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Str
ength
First mover advantage High quality standard
natural and organicproducts
Customer orientation
Emotional connect Passionate and
enthusiastic employees
Reputation Weakness
Premium p Perceived a
shopping d
Lack of intpresence
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Opportunities
Growingconcerns abouthealthier foodhabits
Online retailing
Private labelexpansion
Threats Fiercecompet
Unstabeconomconditi
Market
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Market Penetration
-Rewards andCoupons
-Loyalty Programs-Increase promotions
Market Expansi
-Foray into healconscious countrie
Japan, Italy, New Ze-Target B2B custome
Product Development
-Ready to eat meals
-Increase service offerings
Diversificatio
-Pet Foods
-Cosmetics
-Apparels
-Organic toy
Health prod
GrowthStrategies
Existing
New
Existing New
Products
Market
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