1)Background Whole Foods Market, established in 1980, took 27 years to build up its brand equity and became a leader in natural and organic foods across the United States. The sales of Whole Foods Market kept increasing and generated profit every year except in the year 2000. Ever since the first Whole Foods Market opened in Austin, Texas, more and more people began to know about it and had more access to natural and organic foods. Consumers want to buy natural and organic foods because they believe that these foods were fresh and healthy without any chemical add-on.
Hence natural and organic foods retailing turned into the fastest-growing segment in the U. S. 2)Current Strategy and Analysis of Issues The core value of Whole Foods was “Whole Foods, Whole People, Whole Plant”. They cared about their foods, their staff, their customers, as well as the environment, so they came up with many strategies, which are listed as follow: i. Expanded the company by opening new stores and acquiring attractive candidates. Due to the growth need of the company, acquisition was a good way to roll.
The biggest acquisition for Whole Foods was the purchase of its biggest competitor, Wild Oats Market, in 2007. This gave Whole Foods an easy way to enter into new big cities and even new states, but meanwhile costs of capital were large too. According to the failure of Wild Oats Market, which generated excessive debt from acquisition, Whole Foods should watch out and avoid this kind of mistake happen. ii. Opened larger new stores and reallocated smaller old stores to bigger sites, which were more visible and had more parking spaces.
Whole Foods preferred to locate stores in busy shopping spots and premier real estate sites. They usually did analysis of education levels, population density, income levels, sales projection and many other factors before they locate a store. Besides, parking space was a very important factor to sales of a supermarket, especially for Whole Foods that attracted higher income earners. Thus, a big portion of the Whole Foods’ customers might have cars compared to other supermarkets. iii. Emphasized in different kind of perishables made Whole Foods unique from other supermarkets.
Whole Foods (even after the acquisition of Wild Oats Market) sold various natural and organic foods and nonfood product, while competitors were selling organic food only as a portion of their products. Huge amount of perishables differentiated Whole Foods from other supermarkets. Because of this huge amount of perishable inventory, it is important for Whole Foods to figure out the equilibrium point between inventory and liquidity. Also, Whole Foods have to make sure that the products from suppliers are 100% meet the standard of the company and must be in the finest quality in terms of nutrition, freshness, appearance, and taste.
Any tiny error may cause the whole corporation fail. iv. Created attractive and interactive store atmosphere to impress every customer favorably. Gave consumers a beautiful and comfortable shopping place and provided all kind of services would have certain effects on how likely a customer would come back to do shopping again. Nice, capable, and knowledgeable services were an essential ingredient of the store’s atmosphere. Whole Foods encouraged its staff to offer their best services to delight every customer. However, it is not necessary to offer valet parking or massage.
These services seemed to be offered in hotel not supermarkets. Whole Foods should cut down the expenses of hiring people for these positions and thus lower the price. Whole Foods had the good idea of home delivery, which is a feasible and workable approach to create sales, but it had not been implement widely. v. Focused on word-of-mouth recommendations and testimonials from customers instead of doing advertising. Whole Foods only spending a small portion of its revenue on advertising, which was not enough, it missed a certain amount of potential customers that had not enough knowledge of natural and organic foods.
Why should people abnegate their regular consumption and go for natural and organic foods with a higher price? How will these natural and organic foods affect their life and even the environment? How are these organic standards process? A lot of these kinds of questions should be answered in order to gain more customers. Therefore, Whole Foods should disseminate as much as knowledge to the public through advertising with a higher budget. vi. Empowered different teams to make decisions to operate their departments effectively and efficiently. Truly I believe that if you trust your personnel, most likely that they will work harder for you.
Whole Foods regarded and respected their employees. This is exactly what Whole Foods stated on its intended mission. However, if the company totally relies on team members, some employees might abuse their power, such as corruption. Furthermore, Whole Foods paid bonus in addition to salary, based on the store’s economic value added (EVA) contribution. This stimulated employees to create more values for the whole company. vii. After 2007, Whole Foods emphasized more on purchasing inventory from local, regional, and national suppliers and vendors.
Before 2007, the biggest supplier for Whole Foods was United Natural Foods, which meant it would increase the expense of distribution, thus higher price for the items retailed in the company’s store. Therefore, buying directly from producers and manufacturers could lower the expense and also might have better control over the quality of the products. On top of this, Whole Foods owned nine distribution centres, nine bake houses, five kitchens, and one more coffee supplied store, which not only enhance the quality of foods, but also cut down some media costs. iii. Cared about the society, the environment, and employees while maximizing the profit for the company. Whole Foods did some nice jobs in this strategy, but in some cases, the company somehow was not doing it exactly or properly. Whole Foods wanted to save the environment, so it stopped using the plastic bags and used 100% recycled paper bags, but do you think the process of recycling will not release any harmful gas or hazardous material? Are recycle bags really good for the environment in essence?
Further, Whole Foods always used charity activities to build its reputation, but meanwhile, how could its CEO, John Mackey, act unethically at the backside? This definitely would have impact on the company’s goodwill. CEO is the mastermind and the centre of a company, customers may doubt the food and products that are sold in the company because of the moral lapse of the CEO. 3)Suggested courses of action Day after day, more and more competitors are entering the natural and organic market.
It will help create customer for Whole Foods if Whole Foods can keep its foods quality and the competitive price. In order to maintain the quality, it is better for Whole Foods to own some farms as its major suppliers, in order to reduce the COGS and the cost of inventory. Generally highly educated segment will know natural and organic foods better, and a certain portion of this segment is students. Regularly the prices of natural and organic foods are higher than other normal foods, how can students afford such a high price?
As Whole Foods’ mission, it wants to improve the health and well-being of people. Therefore, Whole foods should give students discount, such as Wednesday or any other day special for people who have valid student ID’s. There are still some people in North America never heard about Whole Foods. How many people can tell there is a Whole Foods store in Toronto? Perhaps some people saw the store for few times, but never known it is selling organic foods, or may not know how well their foods are.
Hence, Whole Foods should try its best to generalize the concept of natural and organic foods and their brand name to as many people as possible via different advertising. Convenience is also a very important factor to be successful. Therefore Whole Foods can expand the line of prepared foods. Certain crowd would like to eat out instead of cooking by self due to many different reasons such as laziness. Thus Whole Foods can hire some good chefs to cook in order to satisfy the needs of those people that are unwilling to cook but want to eat healthy.
Since Whole Foods already has the good sources of foods, it would have higher chance to stand out from other restaurants. In addition, some of the lazy people favour to call for food delivery. After Whole Foods cut down different expenses from valet parking and massage, it can hire more people for home delivery, because to cover most of the profitable region by opening more stores should cost much more than hired people for delivery. People can place orders online and get what they want easily without spending any time in traffic.
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