whole foods rev 8
TRANSCRIPT
-
8/6/2019 Whole Foods Rev 8
1/16
1
-
8/6/2019 Whole Foods Rev 8
2/16
2
-
8/6/2019 Whole Foods Rev 8
3/16
365 EverydayValue
Productscanfillyourpantrywithoutemptyingyourpocketbook Valuepriceseverydayoftheyear
Meetall qualitystandards,comeinbothnaturalandorganicselections:wholegrainfloursandshadegrowncoffeetoorganicmilkandfrozenveggies
Makeiteasytostockuponthebestproductsforthebestprice
WholeFoodsMarket
NonperishablegoodsandbodycareproductsProductsarecarefullyselectedforexceptionaltaste,authenticityandremarkablequality.Fromsmallbatch,artisanrecipestoexoticflavors,thevarietyofourproductswillexpandyourculinaryvocabulary.Withnaturalandorganicchoices,wehavemoreuniqueandexquisiteproductsindevelopment.
Regu ations,En orcement Qua ity
As leadingretaileroforganicfoods,helpedformulatetheNationalOrganicasthesoleretail
representativeontheNationalOrganicStandardsBoard.
Thishandsonapproachallowsourvisionofasustainablefuturetoberepresentedinthedefinition,construction,andenforcementofsustainablelegislationandregulation.Ourdesireforclearandstraightforwardanswersandregulatorytransparencydirectlyassistsindividualsandgroupsseekingaccountabilityfromtheirelectedandnonelectedofficialsonissuesdirectlyrelatedtoorganicsandsustainability.
Inconjunctiontoworkingwithfarmersonalternativesandeducatingourconsumersabouttheharmfuleffectsofsomepesticides,wearetheonlyretailerthatparticipatedinthejointEPA/USDAToleranceReassessmentAdvisoryCommittee.Thetaskofthismultistakeholderadvisoryboardwastoadvisethoseagencieshowtheyshouldfairlyreassessallthepesticides 3
-
8/6/2019 Whole Foods Rev 8
4/16
2009organicsmarket:26.6billion
Organicsare2.5%ofU.S.food/beveragesales
5075%ofU.S. consumersbuyorganicatleastoccasionally
Evenin200373%ofconventionalgrocerystoresofferedsomeorganicselection,we
assumethatstatistichasrisenasoftoday(CatherineGreeneandCarolynDimitri(2003)."OrganicAgriculture:GainingGround".USDAEconomicResearchService) SourcingfromChinarequiresaseriesofcertifying
agenciesinvolvementandontheground
verificationandproducttestingprocedures totake
lace.
WholeFoodsMarketGoal
Provideinformedconsumerchoicewithregardtogeneticallyengineeredingredients
or(GMOs/GeneticallyModifiedOrganisms)throughsupportoforganicagriculture&
commitmenttosource365EverydayValueandWholeFoodsMarketbrandproducts
toavoidGMOs.
Values
Wearepermanentlycommittedtobuyingfromlocalproducerswhosefruitsand
vegetablesmeetourhighqualitystandards,particularlythosewhofarmorganically
4
-
8/6/2019 Whole Foods Rev 8
5/16
Individual Stores
Fallunderbatchprocesswithmediumcustomizationandvolume
365EverydayValuebrand
Offeredateverystorewith minimaltonocustomization
Sourcedfromsmallersuppliersgloballyinsteadoflocallytomeetscale
Supply Chain shortcoming:Sourcing logisticsarevariableandregionally specificeven
though365 EverydayValue productsaremadeinhighvolumewithlow
customization.
5
-
8/6/2019 Whole Foods Rev 8
6/16
1. Increasingcompetitionwithmainstreamgroceryretailers
WholeFoodscompetitiveadvantageofqualitytrustandreliabilityatrisk
QualityStandards
Carrynaturalandorganicproducts:unadulteratedbyartificialadditives,
sweeteners,colorings,andpreservatives
Evaluatequalityintermsofnutrition,freshness,appearance,andtaste
Sellthehighestqualityfoodswecanfindatthemostcompetitivepricespossible.
Neverendingprocessfor thecarefuljudgmentofbuyersthroughoutthecompany.
Carefullyevaluateeachandeveryproductfor sale
Fresh,wholesomeandsafetoeat
Seekoutandpromoteorganicallygrownfoods
2.Globalsourcingallowsflexibilityintheirproductiontobetterrespondtomarket
demand butalsoveersfromtheirmission animportantsellingpointformanyof
itsloyalcustomers
Environmental LocalMessage
Reducetheenvironmentalimpactandcostsoftransportingproduct
Makegreenchoices:LocalProducerLoanProgram(LPLP)providesupto$10million 6
-
8/6/2019 Whole Foods Rev 8
7/16
CertifiedOrganic: CertifiedbyaUSDAfullyaccreditedprivatecertifyingagencyorastategovernmentagency
100%OrganicProduct Mustcontainonlyorganicallyproducedmaterial,excludingwaterandsalt
Nameofthecertifyingagentmustappearonpackages
UseoftheUSDA"organic"sealisoptional
Organ cPro uct Mustbeatleast95%organicallyproducedingredients
RemaindermustconsistofnonagriculturalsubstancesapprovedontheUSDA'sNationalListofnonorganicallyproducedagriculturalproductsthatarenotcommerciallyavailableinorganicform
Nameofthecertifyingagentmustappearonpackages
UseoftheUSDA"organic"sealisoptional
MadewithOrganicIngredients Productmustcontainatleast70%organicingredients.
Remaindercanconsistofconventionallygrownagriculturalingredients
Productmaydisplaytheterm"MadeWithOrganic...
Thenameofthecertifyingagentmustappearonpackages.
UseoftheUSDA"organic"sealisprohibited.
CertifyingOrganic
Whatisorganic 7
-
8/6/2019 Whole Foods Rev 8
8/16
HistoryofU.S.OrganicStandards:
OrganicFoodsProductionAct1990
Responsibilityfordevelopingnationalstandardsfororganicallyproducedagriculturalproducts
ResultedinNationalOrganicProgram(NOP)
MarketingprogramofUSDAsAgriculturalMarketingService
Standardssetby15memberNationalOrganicStandardsBoard
Organicstandardsandcertificationprocessimplementedin2002
Production Handling
Labeling
Certificationishandledbystate,nonprofitandprivateagenciesthathavebeenapprovedbythe USDepartmentofAgriculture (USDA).
ConcernedCitizensSafeguardOrganic
Severalcitizengroupspredateorganicstandards, 8
-
8/6/2019 Whole Foods Rev 8
9/16
9
-
8/6/2019 Whole Foods Rev 8
10/16
ExcerptfromOfficialWholeFoodsBlog
OurstrategyisnottorunawayfromourChinesesuppliers,buttotakeastandand
getclosertooursuppliers.Wewillcontinuetoimproveontheauditandtesting
procedures
that
are
already
in
place OrganicfarminghasalonghistoryinChina
Astheworldpopulationgrows,wearegoingtobeforcedtolookatoursupply
chainsanddevelopemergingorganicsuppliersallovertheworld
Overall,WholeFoodshasdoneapoorjobofcommunicatingtheCOOtoitsshoppers.
Consumersfeelmisledanddisliketheideaofpayingpremiumprices(althoughits
thelowerendofthepricerange)fororganicfoodmadeinChina.
Consumersolutionfromecomatters bloggerKevinMcCann
10
-
8/6/2019 Whole Foods Rev 8
11/16
Pro:HighgrowthrateintheorganicmarketinChina
impliesahugeopportunityforWholeFoods,ifithasplantoexpandstorestoChina. Chinascostsadvantage
inproducingorganicfood.
Con:ManipulationofcertificationprocessinChina.Chinasproductsecurityissuesmayunfavorablyaffect
WholeFoodsbrandvalue.
11
-
8/6/2019 Whole Foods Rev 8
12/16
WholeFoodshastobalancethebenefitsofreducedcosts andaccessingthe
Chinesemarketwiththepotentialpitfallsofinsufficientproductverificationand
quality
TheChinese marketisburgeoning:onboththesupplyanddemandsides
The switching
costs
are
great
lose
what
has
already
been
invested
in
China,
andhavetobuildinfrastructureelsewhere(again).
andhandledaccordingtotheorganic standardsregulationsfacea(civil)
penaltyupto$10,000perviolationintheU.S.(OTA)
TakeanactiveroletostayinChina
*Build localentitypartnerships
Fostergoodrelationswithprovincialgovernmentsandregulatory
bodies
so
they
enforce
organic
regulations
for
WF,
vs.
accepting
bribes
or
beingotherwiseunsupportiveofthelocalfoodmarket
Buildstrongtieswithgovernmentagriculturalextensionagentsso
theyhavethecapacityandwillingnesstoprovidetechnicalassistanceto
farmersinterestedinorganic
*Partnerwithlocalfarmersgroups
ScaleissmallerthanWalMart etc.,butpartnershipwithsmalland
mediumsizedfarmscanstillbuildequitablepartnership,effectivescaleto
enablesteadysupply,andmaintainWFlocalfocus 12
-
8/6/2019 Whole Foods Rev 8
13/16
Keytakeaways fromWholeFoodsdilemma regardingChinesestandardsverification
impactingits365organicbrandedproducts
Lessonsareapplicableparticularly toChina,alsotootheremerginganddeveloping
markets,andeventoanynewsupplier:
Complexity: lowcostlabororproductiondoesnotnecessarilymeanlowtotalcost,
, ,
coordinationcosts
Understandingthelocalcontextiskey: howthemarketworks,whatmaterialsare
easilyavailableinit,whoaretheactorsandwhydotheyactthewaytheydo,howto
communicatewiththem
Branding: ensurealignmentbetweencompanymissionandsupplychain andnot
onlyreality,buthowthatisperceived(whichispotentiallyirrational);mitigatebrand
issuesproactivelyandhonestly,aspartialtruthswilllikelybeairedeventually
Obstaclesmaybecommunicationorcapitalbased: foreither,investmentis
required.Investmentinownedorpartnerfacilities/capabilitiesabroad,butalsoin
homecapacitytointeractwithglobalaspectsofoperations
13
-
8/6/2019 Whole Foods Rev 8
14/16
14
-
8/6/2019 Whole Foods Rev 8
15/16
Background
Opene inAustin,Texas:19emp oyees
LessthanhalfadozennaturalfoodsupermarketsintheUnitedStatesatpoint ofmerger
Rapidgrowth&acquisitionsthroughoutthe90'sandforward
Lastacquisitionin1997wasofWildOats,109storesin23statesandBritishColumbia,Canada
Publiclytradedcompany,current MarketCAP:6.43B
Every
single
store
is
unique Geographic Locations:
200,000peopleormoreina20minutedrivetime
Largecollegeeducatedpopulation
Abundantparkingavailableforexclusiveuse
Motto:WholeFoods WholePeople WholePlanet
Mission
CalledtheirDeclarationofIndependence,createdin1985lastupdated1997:
Qualityisastateofmind:highestquality,leastprocessed,mostflavorfulandnaturalfoodspossible
Gotoextraordinarylengthstosatisfyanddelightourcustomers
Togrow atapacethatqualityofworkenvironment,TeamMemberproductivityandexcellence,customersatisfaction,andfinancialhealthcontinuetoprosper
Balancestore needswiththeneedsoftheplanetthrough:
Supportingsustainableagriculture committedtogreaterproductionoforganicallyandbiodynamically grownfoodsinordertoreducepesticideuseandpromotesoilconservation.
Reducingwasteandconsumptionofnonrenewableresources.(promoteandparticipateinrecyclingro rams reusable acka in reduced acka in andwaterandener conservation
CoreValues
SellingtheHighestQualityNaturalandOrganicProductsAvailable
SatisfyingandDelightingOurCustomers
SupportingTeamMemberHappinessandExcellence
CreatingWealthThroughProfits&Growth
CaringaboutourCommunities&OurEnvironment 15
-
8/6/2019 Whole Foods Rev 8
16/16
16