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8/10/2019 Wfm Final Latest

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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.mp4


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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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