Whole Foods Market Case
Whole Foods Market is a natural and organic grocery store that strives to provide its customers with the highest quality foods and freshest foods available. They want to commit to making shopping at their many stores around the world an enjoyable and interesting experience that will make people want to come back and shop. They are trying to reach out to more customers especially with the way the economy is to be able to build their empire even greater. Whole Foods is a market leader who is continuing to grow every year. Strategy
Whole Foods Market has a fairly simple strategy, provide the best natural and organic food that they can find from local farmers to their loyal customers. Whole Foods wants to base their store on not only serving its community by giving a great shopping experience to their customers, they also want to help their local farming community in each location of their stores. Their biggest factors in their strategy for building a successful business are; store location, product line, expense control, merchandising, marketing, and customer service. Being able to control these factors gives Whole Foods the ability to be a market leader in natural and organic foods.
When Whole Foods went public their growth strategy was a combination of opening new stores and acquiring small, owner-managed chains that had capable personnel that they could keep in place and in which the stores were in desirable locations. They try to locate their stores in high traffic and upscale areas as most natural and organic foods can be expensive, especially if they are local foods. While their strategy up until 2007 was to continue to make their stores bigger in square footage with every new store, they had to cut back on not only the size of their stores but how many were being built. In 2007 they went from 186 stores the year before to 276 stores. However, in 2008 they dropped to 275 which was something they had never experienced. Knowing when to stop expanding was a strategic move for them that probably kept them in business as most people cannot afford healthy
food at such a high price in a down economy.
Since Whole Foods tries to adapt to its different clientele in each store their products change. Being able to change their product line for each store helps them be able to satisfy more customers. This is an added feature for stores that have fresh produce for local farmers’ or fresh natural beef and chickens. By offering local food options it brings in more consumers because they are able to find out exactly where their food is from instead of wondering if it came from a different country. In addition to helping their sales by offering locally grown food, they are also helping the local farmers. They are also helping the community surrounding their stores and their farmers, because money spent in the community stays in the community.
It is difficult to sell natural and organic foods at a “cheap” price compared to normal chain grocery stores such as Safeway and Albertsons. The added price in growing and distributing their food from local farms is much higher it raises the price of the food, but the food is also very high in quality. The thing that helps most natural food stores overcome their pricing model is that their clientele will pay the extra money for the higher quality food. This is a key factor for Whole Foods as they keep expanding to grow their brand; if the service is great and the food is high quality, it is worth the extra money to the right people. They have changed to offer cheaper foods to reach a broader customer basis and it seems to be helping sales as they continue to grow every year.
Whole Foods merchandising strategy is to customize each layout to each site, by highlighting the particular mix chosen for that store’s target market. Most chains stick to one layout for all of their stores so that they can all be uniform and operate the same way. The way Whole foods does creates their stores makes more sense in adapting to their surroundings and letting each store be their own to a certain extent. Whenever I have walked into a Whole Foods I do not get the feeling that it looks like the last one I have been in, it makes me want to explore the store and see what is new and different from the last one. This is a great model for them to build upon and
something that I believe more stores need to explore.
Whole Foods marketing strategy of not spending a bunch on commercials and billboards and relying more on word of mouth seems to be working just fine. I work in a grocery store myself and most of the time customers do not say that they heard our ad on the radio or television but that they heard about our great sale from a friend. In my experience people will listen to what their friends and family have to say about a certain store over something they read about before going shopping. The more that a company can rely on its valuable customers and employees to spread the word about how great their store is, means more money in the companies pockets.
At Whole Foods they try to use the team approach for their employees where everyone helps each other. This is a great model to keep employees happy and working together. I have seen the opposite of this strategy first hand and I know how bad it is when you cannot rely on your coworkers to help out when it is needed. By working in small teams within the overall store gives each employee an opportunity to try and become a leader and to move up within the company.
I believe that Whole Foods is well matched to recent developments and conditions in the natural and organic foods segment of the food retailing industry. With being in business for over 30 years and being successful, I think that Whole Foods has been able to adapt to every new development that has been thrown at them over the past years. After reading more about their company in the case I would say that they are part of the development and the change that is happening with the natural and organic foods segment. They have such a larger market share that other stores look to see what changes they are making before they decide to do something against the norm. With the increase over the last few years of interest in healthier food there has been a lot of development in new natural food stores around the nation. To be able to stay ahead of the group Whole Foods has had to keep creating new ways to bring in more customers and to have happier employees around them.
I feel as though John Mackey has a great strategic plan for Whole Foods and that their motto really fits into what they are trying to provide. “Whole Foods, Whole People, Whole Planet” explains what they are trying to do and is easy to understand if you are just hearing about the company for the first time. The first part “Whole Foods” is obvious on what they are trying to say, that they are providing only the highest quality foods for their loyal customers to make them want to come back and continue to shop. The next part of the motto “Whole People” is something that makes people think a little harder about, but it means that they are trying to only employ the hardest working and people who are generally happy to be at work and passionate about food and the company they work for. By taking care of their workers, it helps provide a more enjoyable atmosphere and a more enjoyable shopping experience for new and loyal customers. Finally “Whole Planet”, Whole Foods supports their local organic farmers on a global basis surrounding all of their locations. Doing what they can to make sure they planet stays healthy by selling organic products and making sure to recycle almost all of their waste and to support non-profit organizations as much as they can. The more that Whole Foods can do for their local communities, the local communities will help support them. Their strategy is working as you can see by their growth rate in not only profits but stores and rise in interest in healthier food products. John Mackey has developed a strong strategic plan that is helping them succeed in this economy that is slowly starting to get stronger.
The core values that Whole Foods uses to have a successful business strategy are very effective from what I have been able to dissect out of the case study. Every value that is listed is pressed on is part of the overall strategy of Whole Foods. Starting with the first and number one value; selling the highest quality natural and organic products available. This is what Whole Foods has been built on, they would not be where they are today as a market leader if they did not hold this as a core value. The second value of satisfying and delighting their customers also seems like a value that they try to keep throughout all of their stores. If two grocery stores
have the exact same items for the same prices 99 percent of consumers would go to the one with better customer service. Customer service is a huge part of any business, people do not want to go to a store with poor customer service where they feel like there is no one to help them find something or that they feel they are being ignored. The next value of team member happiness makes a huge impact to Whole Foods. Working for a corporation that makes you want to go to work and enjoy being there is hard to find and if you can make your employees feel appreciated and that they are needed to make the store function properly it changes the atmosphere of the store for the better. Customers want to walk into a store and be greeted by lots of smiling and happy people to make them feel welcome in the big 40,000 square foot building. Having the employees want to work hard to make the company better and to move up and make a career is something that is not seen in most grocery stores as working retail is not always desirable. By making your employees happy, you can also make your customers happy. Creating wealth through profits and growth, caring about their communities and creating ongoing win-win partnerships with suppliers seem to fall into the same category to me. Without having the great partnerships with their suppliers it is hard to help the local communities surrounding the different store which than makes it hard to pull in a profit. If Whole Foods did not have such a big impact on their local communities they would not pull in as many customers as they may go to food co-ops that get most of their foods from local farms. Then with less customers that means less profits which leads to little to no growth. I feel it is important to have such connecting core values as it helps to keep focus on them all without losing focus on one of them. Finally their last core value of promoting the health of their stakeholders through health eating education is important. Having workers that no how to eat healthy and practice eating healthy makes it easier for customers to take their advice on eating habits and gives them more knowledge about the thousands of different products throughout the store. Holding core values for such a big company like Whole Foods is important; it helps them not forget where they came from thirty years ago.
Overall I feel as though John Mackey has done a great job at sustaining the
company’s growth and financial support. For a whole natural food market to keep such a substantial market share and profit through such bad economic times and continue to grow; they are doing something right. The only thing that I can think of to add to their strategic plan is to stay up to date with technology. With all of the technology that is being created today it seems as though companies need to adapt to the new technology quickly or possibly lose customers. It seems like that would not have a huge effect in a grocery store but it does. New checkout systems and inventory management along with refrigeration and heating systems, new technology is changing the way grocery stores work. While self-checkouts taking away jobs and lowering labor costs seem to be good for the company’s financials I have seen where people dislike the system and would prefer the face to face interaction and not have to deal with a computer for a small part of their day.
Overall I feel as though Whole Foods has a great business model that shows through hard work and dedication a store that people thought might not make it has turned into a global market, with some key core values and some creative thinking.